Rescue package likely for all struggling highway projects

NEW DELHI: The highways ministry wants to extend its rescue package allowing staggered payment of premium to all struggling highway projects instead of the previously identified 23 projects. It has asked the Cabinet to allow the board of the National Highways Authority of India ( NHAI) the liberty of deciding which projects are under stress and deserve respite.

The Cabinet is likely to take a call on the proposal on Tuesday. Highway developers wrote to NHAI and the Prime Minister’s Office last month cautioning the government cherry-picking projects could invite litigation.

The supplementary note suggesting this option has been circulated to other ministries as well. This is believed to be in line with road transport and highways minister Oscar Fernandes’ view of empowering NHAI board so that they can play a bigger role in executing key decisions.

“The highways ministry has asked Cabinet to give them a dispensation to develop a formula to determine stress and whichever projects fall in this definition can be allowed to restructure their premium payments quoted when bidding for the project,” said an official familiar with the development.

The projects in respect of which the NHAI has failed to fulfill its obligations or conditions precedent within the model concession agreement could be eligible for relief. Under the carte blanche with the highways ministry has asked for, the NHAI board can debate and come up with a solution which can be applied after it is approved by the ministry.

The proposal is aimed at easing the financial flow in projects by allowing lenders to recover their debt payment first while NHAI can recover the premium at a later date with interest.