looking at the poor market situation and the tardy roll out of road projects, the Ministry of Roads, Highways and Transport (MoRTH) is planning to offer rescue packages for all struggling highway projects. These projects have been awarded since 2010 and have failed to pay up the premium amount, which is about one per cent of the project cost.
The Ministry had earlier given a go-ahead for 23 struggling projects, which are still to take off, but now it is working on extending the benefit to all the 39 projects awarded since April 1, 2010, including projects which have begun. The premium committed in case of already started 16 projects is around Rs55,000 crore over 25 to 30 years and developers of yet-to-be started 23 projects have committed to pay over Rs1 lakh crore.
The Ministry has asked the Cabinet to allow the board of National Highways Authority of India (NHAI), the freedom to identify projects that are under duress and may be given respite.
The Cabinet is likely to take a call on the proposal in the next meeting. Highway developers have been petitioning to NHAI, Ministry and the Prime Minister’s Office for restructuring the premiums. Only last month, the developers had together written to the NHAI cautioning the Government that cherry-picking projects would invite litigation.
This decision is in line with Road Transport and Highways Minister Oscar Fernandes’ view of giving added powers to the NHAI board so as to give them a bigger role in executing key decisions with regard to road constructions.
“The Highways Ministry has asked Cabinet to give them a will to develop a way so as to determine stressed projects and allow them to restructure their premium payments quoted when bidding for the project,” official said.
The proposal is aimed at easing the financial flow in projects by allowing lenders to recover their debt payment first while NHAI can recover the premium at a later date with interest.