National highways authority of India to intervene to complete stalled projects
GN Bureau | May 13, 2015
With the government looking to award 10,000 km of highways in the current fiscal the cabinet on Wednesday approved 100 percent equity divestment after two years of construction completion for all BOT (build operate and transfer) projects.
In order to provide a renewed thrust to the highway sector and to bring the private sector back on board, the Cabinet Committee on Economic Affairs (CCEA), chaired by prime minister Narendra Modi, has approved two major policy initiatives aimed at improving the availability of equity in the market. The CCEA also authorized the National Highways Authority of India (NHAI) to intervene in languishing projects suffering from lack of funds. This will facilitate one time fund infusion to revive and complete languishing BOT Projects
The CCEA has approved a comprehensive Exit Policy framework that permits concessionaires/developers to divest 100 percent equity, two years after completion of construction.
This step has been taken bring in more parties into infrastructure building projects. During the last few years, PPP (public private participation) projects have not been able to attract bids due to lack of availability of equity with the qualified bidders. The exit policy is a sort of incentive and it will unlock equity from completed projects making capital potentially available for investment into new projects. This decision will also harmonise conditions uniformly across all concessions signed prior to 2009 with the policy framework for post 2009 contracts which permit divestment of equity upto 100 percent, two years after completion of construction.
AS per estimate there are 80 such 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.
Meanwhile, 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. In conjunction with several other measures being taken to revive such stalled projects, CCEA on Wednesday approved a special intervention for the projects that are in the advanced stage of completion but are stuck due to either lack of additional equity or lender’s inability to disburse further.
The 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.
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. 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. This will also add momentum to the overall growth of the highways sector in India which is already on the path of revival.
The dazzling diamond trade has been hit hard by the Nirav Modi episode, which saw the billionaire jeweller flee India just before a massive fraud amounting to Rs 11,000 crore was detected at a Punjab National Bank branch in Mumbai. But, Nirav Modi is not the only diamond tycoon who has been
PM Narendra Modi on Sunday laid the foundation stone for Rs 16,700 crore Navi Mumbai International Airport. The first phase of the construction is expected to be completed by December 2019. The project is going to be implemented 21 years after it was first proposed. The airport is likely to handle 10 milli
Health groups have expressed their disappointment with a February 12 order of the supreme court, refusing to review or recall an earlier order disposing off a case against the mala fide suspension of the vaccine public sector units (PSUs) and government’s tendency to pamper private sector with public
The Punjab National Bank`s fraudulent transactions worth Rs 11,300 crore should act as a strong trigger for the government for reducing its stake to less than 50 percent in the banks which should then be allowed to work on the lines of private sector lenders with a full sense of accountability to their sha
Budget 2018, forecast to be a “please all” budget, has come out as a “disappoint all” budget. The public is looking askance at a budget that gives with one hand but takes away with both, the Sensex has gone into a tailspin and the pink papers are issuing dire warnings.
Should public sector banks be privatised?