In bid to raise funds for projects, Gadkari’s team making briefs on problem areas
Officials at the Ministry of Road Transport and Highways are preparing a presentation for Prime Minister Narendra Modi’s meeting with financial institutions and bankers to raise money for infrastructure projects, particularly highways, as the sector has been in financial stress for the last two years.
According to the Government’s own records at least Rs 1.80 lakh crore are stuck in 189 road projects. The Prime Minister (PM) is expected to meet the bankers and potential money lenders in the coming week to discuss possibilities of raising capital to fund the stalled infrastructure projects.
“Ministry officials have been asked to identify issues for which solutions are needed, which the PM can put forth to the bankers,” said an official from MoRTH. “The Government is worried about the complete absence of interest from private players as many big infrastructure groups are debt ridden and have opted out of projects because of poor growth and returns,” he said.
Minister for Road Transport, Highways and Shipping Nitin Gadkari has also had several rounds of talks with bankers and private players to study and identify the issues troubling the sector, particularly poor financing.
“Despite measures announced by the Government in the financial Budget, funding for infrastructure sector has remained elusive, especially as private players are not coming forward for the bids as lenders are wary of putting in money in the infrastructure sector,” said an official.
“Several players who had invested in the sector in the past are now wary of further investments because of the issues of delays in the mandatory environment and forest clearances and land acquisitions involved. These delays make the projects expensive and ungainly thereby resulting in losses for the investor,” he said.
Companies in sectors such as roads and ports are finding it difficult to arrange money to work on projects. Officials said a boost to the road sector is possible, considering its smaller construction period and comparatively smaller investment size, when contrasted to big power projects and ports, which involve both longer time frames and massive investments.
To give the sector a boost, the Government is already working on amending the land acquisition law and is allowing renegotiations of public-private-participation contracts to bring in more flexibility for the investor. The Finance Ministry has also proposed the creation of two asset reconstruction companies, one dedicated for roads and another one for power.