National Highways Authority of India to intervene in languishing projects

The Cabinet Committee on Economic Affairs (CCEA), also approved a comprehensive Exit Policy framework, that now permits concessionaires/developers to divest 100 percent equity, two years after completion of construction.

The Dollar Business Bureau In an effort to add momentum to the overall growth of the highways sector in India which is already on the path of revival, The National Highways Authority of India (NHAI) has been directed to develop a robust mechanism to determine eligibility of the project as also the extent of funds required to complete projects, in time-bound manner. The new development comes in the wake of the Cabinet Committee on Economic Affairs (CCEA), chaired by the Prime Minister Narendra Modi, approving two major policy initiatives aimed at improving the availability of equity in the market and authorising the National Highways Authority of India (NHAI) to intervene in languishing projects suffering from lack of funds, said a PIB release. The CCEA also approved a comprehensive Exit Policy framework that now permits concessionaires/developers to divest 100 percent equity, two years after completion of construction. During the last few years, PPP projects have not been able to attract bids; one of the primary reasons being lack of availability of equity in the market among qualified bidders. There are 80 such Build, Operate and Transfer (BOT) projects awarded prior to 2009 that have been completed and the locked in equity in these projects works out to approximately Rs. 4500 crore. Once this is unlocked and is re-invested in new projects this could support 1500 kms of new highways on PPP mode, thus help in reviving the response to BOT (T) projects, the release said. Out of the ongoing 240 PPP Projects, some are languishing due to delays on account of land acquisition, grant of statutory clearances, local issues and shortage of construction materials etc. NHAI has been authorized to provide funds to such projects from within its overall budget/corpus on a loan basis at a pre-determined rate of return. This loan is to be recovered along with interest as the first charge from the toll receipts immediately after completion of construction. It is expected that about 16 such projects languishing in various part of the country where public is facing difficulty on account of incomplete works will benefit from this decision.