Patna, Aug. 2: Bihar government approved a proposal that talks of private investment of over Rs 600 crore in road sector. The government nod came in the cabinet meeting held today.

According to proposal details, the 116km stretch of National Highway-30 between Ara and Mohania would be constructed under public-private-partnership (PPP) mode.

This four-lane road would be constructed at a cost of Rs 1,077 crore and 32.97 per cent of the project cost would be provided as viability gap funding (VGF), which would be jointly borne by the Centre and the state government.

According to rules, in any infrastructure project being implemented under the PPP mode, a maximum of 40 per cent of the project cost can be raised through VGF and the Centre and the state concerned share the amount of VGF.

“In the Ara-Mohania project, while the private investor would invest Rs 619 crore, the Centre would provide Rs 183.36 crore as its share. The remaining fund would be provided by the state government and out of state’s share, Rs 160 crore would go towards land acquisition and utility shifting work,” cabinet co-ordination department principal secretary Ravi Kant told reporters in a post-cabinet news meet.

He said the selection of the agency had been done and now that the cabinet had given approval to the proposal, work order for the project would be released.

This would be second major private investment in road sector. The first one came in the bridge being constructed across Ganga between Bakhtiyarpur (Patna) and Tajpur (Samastipur).

Out of the total project cost of Rs 1,602.74 crore, the private player is investing Rs 917.74 crore while the Centre and the state government are investing the remaining fund jointly.

Another major decision taken in today’s cabinet meet pertained to unbundling of Bihar State Electricity Board. According to the proposal approved by the cabinet, five companies would come up after restructuring of the board.

While Bihar Rajya Vidyut Company would be the holding company, the other companies that would come into existence would be Bihar Rajya Vidyut Utpadan Company, Bihar Rajya Vidyut Sancharan Company, North Bihar Vidyut Aapurti Company and South Bihar Vidyut Aapurti Company.

“The service conditions of the existing board employees would remain the same after unbundling of the board,” Kant said.

The unbundling of the board had become necessary in the wake of the Electricity Act, 2003. Almost all states barring a few like Bihar and Jharkhand have completed the unbundling process.

The cabinet also approved a proposal which talked of giving consent to the recommendations of the fourth state finance commission for devolution of part of the state revenue to the panchayati raj institutions (PRIs) and urban local bodies (ULBs).

According to the proposal, the state would share 7.5 per cent of its net revenue to PRIs and ULBs. “According to projections, the state’s net revenue is likely to be Rs 7,226 crore and according to the approved formula, around Rs 233 crore would be disbursed among the PRIs and ULBs,” the principal secretary said.

Out of the total money to be given to these bodies, 70 per cent would go to the PRIs and 30 per cent to the ULBs.

The fourth state finance commission was headed by D.R. Mehta and its recommendations would be valid from 2011-12 to 2014-15. The commission had submitted its report in 2010, Kant said.

Twenty-five decisions, including grant of Rs 982 crore for state universities, sanctioning of 64 teaching and 80 technical and administrative posts for upcoming Lok Nayak Jayaprakash Institute of Technology at Chhapra and directives to government departments with regard to centenary year celebrations of the state, were taken in the cabinet meeting.