Rangarajan Panel to submit guidelines for Premium Restructuring
The Rangarajan panel was entrusted with the formidable task of arriving at a resolution regarding the bailout package for developers, for highway projects about a month back. Besides, it was also designated with looking into the rescheduling of premiums to the tune of about Rs.1 lakh crore that developers have to pay the National Highways Authority of India (NHAI). It was given a month’s time to come up with a suitable plan to resolve these issues.
NHAI to be responsible for implementing proposals:
However, the Rangarajan panel, has arrived at the decision that it will only formulate guidelines with regards to rescheduling of premiums for road projects. The responsibility of implementing the proposals put forward by the panel in the form of guidelines will solely rest with the NHAI. It is expected that the panel headed by the Prime Minister’s Economic Advisory Council Chairman Mr. C. Rangarajan, will submit its report by the end of November, 2013.
Panel to be in charge of formulating framework, setting regulations:
Commenting on the proposal that is expected to be put forward by the panel, the Road secretary stated that the objective of the panel was not to look at individual projects. It was more to do with formulating a framework as well as setting regulations with regards to going about with highway projects. Besides, the panel will also be in charge of setting down the parameters for the future course of action regarding highway projects, which will then be taken up by the NHAI Board. The panel also consists of representatives from the Finance ministry as well as the Planning Commission.
Premium rescheduling to be different for pre and post construction projects:
The issues that the panel will take up for consideration include premium restructuring for developers, the rate of interest on premium as well as identification of stressed projects, which can afford to delay payments. Premium rescheduling will be different for pre-construction and post construction projects. The report of the panel would be submitted to the Finance Minister by the end of November.
Proposal to provide relief to major highway developers:
The proposal to reschedule the premium for highway projects was mainly intended to provide relief to major infrastructure players who are involved in multiple highway projects. Many of these projects have been long delayed due to the higher premium that these developers have to pay the NHAI, as specified under the Build, Operate and Transfer (BOT) mode. The premium payable by the developer of the project to the NHAI is normally fixed during the bidding stage. It is generally fixed based on the expected returns that will accrue to the developer from toll collections.
