NHAI board okays entity to revive stalled projects
These projects are facing major delays due to non-availability of funds from private developers and financial institutions.
By Dipak K Dash, TNN | Updated:
NEW DELHI: The National Highways Authority of India board on Thursday approved in principle a plan to set up an asset reconstruction company, which will take over stranded projects and nurse them back to health so that they are ready to take off.
The decision came amidst a surprise last-minute protest by the now-defunct Planning Commission which shot off a letter hours before the NHAI board meeting. Sources, however, said that the board decided to go ahead with the plan as it is expected to get the highway projects off the ground.
The company will take up such projects to push their completion. These projects are facing major delays due to non-availability of funds from private developers and financial institutions. Though NHAI officials did not give details of how many projects can be revived by this company, they added that a host of projects would be revived "without causing any loss to the government".
NHAI Board has members including secretaries from road ministry, planning commission and expenditure department. "When the contours will be finalized, it will again be placed before the board. The Indian Banks' Association ( IBA) has already given its consent," said an NHAI official.
NHAI had sent the proposal to IBA as banks and financial institutions have to play a major role in this new entity and such an arrangement would also help banks, which are staring at many of the highways projects, which are close to becoming NPAs.
It can also take up projects that need less investment to complete small portions of delayed works. In this case, after completing the work by pumping finance, the entity would be allowed to collect toll for some period to recover its investment. Subsequently, the lenders would get back the project to recover their investment by collecting toll for the remaining period of the concession agreement so that they don't face huge less, though this will result in some "haircut". The Board also approved the resolution of disputes involving three contract packages worth over Rs 2348 crore for an Rs 271 crore only.
The decision came amidst a surprise last-minute protest by the now-defunct Planning Commission which shot off a letter hours before the NHAI board meeting. Sources, however, said that the board decided to go ahead with the plan as it is expected to get the highway projects off the ground.
The company will take up such projects to push their completion. These projects are facing major delays due to non-availability of funds from private developers and financial institutions. Though NHAI officials did not give details of how many projects can be revived by this company, they added that a host of projects would be revived "without causing any loss to the government".
NHAI Board has members including secretaries from road ministry, planning commission and expenditure department. "When the contours will be finalized, it will again be placed before the board. The Indian Banks' Association ( IBA) has already given its consent," said an NHAI official.
NHAI had sent the proposal to IBA as banks and financial institutions have to play a major role in this new entity and such an arrangement would also help banks, which are staring at many of the highways projects, which are close to becoming NPAs.
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Sources said the new body, which will have participation of both banks and NHAI, would have two options. It can take over stressed projects from private developers as per the substitution clause of the concession agreement. After the project gets completed, the entity can either start collecting toll to recover the investment or can sell the project in the market. It can also take up projects that need less investment to complete small portions of delayed works. In this case, after completing the work by pumping finance, the entity would be allowed to collect toll for some period to recover its investment. Subsequently, the lenders would get back the project to recover their investment by collecting toll for the remaining period of the concession agreement so that they don't face huge less, though this will result in some "haircut". The Board also approved the resolution of disputes involving three contract packages worth over Rs 2348 crore for an Rs 271 crore only.
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