PMO rejects compensation proposal to road developers

NEW DELHI: The Prime Minister's Office ( PMO) has turned down the proposal of highways ministry and NHAI to pay cash compensation of nearly Rs 1,000 crore to developers, who lost this revenue last year as government had suspended toll collection for 27 days.

Tolling on all national highways was suspended due to less availability of small currency notes following the government's announcement to withdraw Rs 500 and Rs 1,000 notes in November.

Highways ministry and NHAI had proposed that the loss of private players could be cleared in one go. However, sources said, PMO has said NHAI can pay the compensation as per the provisions of the model concession agreement ( MCA).

According to MCA, which governs all highway projects on public-private-partnership ( PPP), toll operators are entitled for interim reimbursement of expenditures, such as interest of the loan they have taken from banks for the projects and the expenses towards operation and maintenance (O&M).

They are entitled to get additional number of days to collect toll after the end of the existing contract period to recover the loss. The extension of contract period will be equal to number of days when toll collection was not allowed.

NHAI had originally initiated the proposal to compensate private highway operators “to boost the confidence of investors“, give “immediate relief “ to already-stressed developers and to provide a safeguard against bank loans becoming NPAs.