The panel formed under Prime Minister Manmohan Singh’s economic advisor R Rangarajan to find solutions to rescheduling the premium payments — upfront payment made by the road developer after bagging contracts — is expected to submit its recommendations by the end of next week.
The panel, comprising of officials from Road Ministry, Finance Ministry and National Highways Authority of India , has been working on a plan to reschedule premiums involving `1.5 lakh crore by private developers who have bagged projects quoting annual upfront revenue.
The panel is expected to chart out a bailout policy for the 39 projects awarded since April 1, 2010. The premium committed in case of already started 16 projects is around `55,000 crore over 25-30 years and developers of yet to be started 23 projects have committed to pay over `1 lakh crore.
The panel is also entrusted to study whether a project is actually “stressed or not,” as earlier the road ministry had only agreed to restructure premiums for the non-starter projects but after immense pressure from both developers and NHAI agreed to review all 39 projects.
One of the major decisions will be if the discount rate for rescheduling should be 10 per cent or 12 per cent. While the ministry has said that as per the norms this should be 12 per cent, NHAI and road concessionaires have been demanding for a reduction.
Although the final decision will be taken by the Ministry of Finance, the panel will first submit its recommendations to the Road, Transport and Highways Ministry.
“Premium restructuring is important as there is no equity in the markets. This move will not just help restore confidence among lenders but may also provide financing to the stalled projects. looking at the markets, there can be no other solution,” said a senior official from the Ministry.