After several months of waiting and moving the proposal back and forth between ministries, the National Highways Authority of India, responsible for management of all Indian highways, gave a go-ahead to nine of the 23 stressed road projects to reschedule their premium payments.
The move, which is expected to provide great relief to private road developers unable to pay premiums under bad market situations, is also aimed to revive stalled road works and attract investments.Premium is a payment made by the developer to NHAI in build, operate and transfer (BOT) projects. It is offered by companies during the bidding stage and is based on projected returns from tolls.
“Nine projects have been approved for premium restructuring by the NHAI Board,” said an official in the Ministry of Road Transport and Highways (MoRTH).“The Board of NHAI considered nine proposals for deferment of premium and approved the same,” he said.
In all, the nine proposals involve deferment of premium for a total value of Rs 5,959.93 crores. The period, during which such deferment is considered, spans the period 2014-15 till 2026-27. The deferment granted during 2014-15 amounts to Rs 651.30 crores.“These projects were taken up on a case by case basis and each project’s premium payment has been restructured as per the demand,” the official, who was part of the meeting.
The move is expected to send a positive message to road sector players at large. “This might restart activity in this standstill sector and hopefully will able to attract investments,” Vishwas Udgirkar, Senior Director, Deloitte India said.The MoRTH had sent a Cabinet proposal earlier seeking approval for rescheduling of premiums of 23 stressed projects awarded on BOT, valuing around Rs 1 lakh crore.
These projects have been facing delays on account of high premium. The Cabinet allowed dealyed premium payment after taking into consideration recommendations of a panel, headed by Prime Minister’s Economic Advisory Council Chairman C Rangarajan.
last year, GMR Infrastructure exited the Kishangarh- Udaipur-Ahmedabad project 16 months after securing the order.It is believed that the company terminated the contract on account of difficulties in taking up the project due to regulatory hurdles, including delays in environment clearance and land acquisition.