Apprehensions raised regarding premium rescheduling of highway projects
The Union Cabinet’s decision to bail out financially stressed highway projects by easing payment schedules has come as a respite to highway developers. Incidentally highway developers were under considerable stress due to rising construction costs as well as non-availability of loans from banks.
Ministry officials apprehensive about legal implications of decision:
However, officials in the Ministry of Road Transport and Highways are treading with caution with regards to this sensitive issue. They are apprehensive of the legal implications that any decision they take might have. Since the decision involves providing concessions to private companies that have failed to honour their contracts with the government, officials are in a conundrum regarding whether to go ahead with their decision.
Revenue accruals of equal importance:
Toll collections are already being made by developers for many projects that are being converted from four-lane to six-lane stretches. Compared to projections made by the Ministry of Road Transport and Highways, revenue stream accrued from these projects is only about five to seven per cent less. While determining whether a project is financially stressed, the revenue accrued also has to be considered, irrespective of whether there is an increase in costs.
NHBF wants premium restructure to be across schemes:
Moreover, the officials also fear that once these projects are bailed out, there might be similar demands from developers of other highway projects as well as projects in the ports sector. The National Highways Builders Federation (NHBF) has intimated the Prime Minister to ensure that any payment restructure measure taken by the government should be applicable across all schemes.
Ministry prepares list of 50 BOT projects for premium reschedule:
The Ministry of Road Transport and Highways has initially prepared a proposal to reschedule premiums for 23 Build-Operate-Transfer (BOT) projects of about 1 lakh crore. Currently, this list has expanded to about 50 projects. The projects that are included in this list involve those that are being considered under the ‘Policy for rationalisation of premium quoted by concessionaires in respect of highway projects’. They include the project being undertaken by GMR Infrastructure for six-laning of the 555-km Kishangarh-Udaipur-Ahmedabad highway.
