Bailout for Highway Developers: Rangarajan Panel to Submit Report within a month
Highway developers have something to cheer about, with a panel set up to investigate issues related to bailout of highway projects that they are committed to. The panel headed by the Prime Minister’s Economic Advisory Council (PMEAC) chairman will undertake a thorough study into this issue and present a report on their findings in a month’s time.
Road Secretary expresses optimism:
Commenting on the issue, the Road secretary stated that a meeting with the Chairman of PMEAC has been fixed for October 25th, 2013, to discuss about the underlying issues based on which the study will be conducted. He was optimistic that in four weeks time an amicable resolution would be arrived at for framing guidelines to reschedule the premium for highway developers.
Govt. approves proposal:
The Chairman of PMEAC, Mr. C.Rangarajan, will head the panel for the study. Besides, there will be two other members, who will be named shortly. Heeding to the request made by highway developers for the postponement of premium payments for highway projects, the government, earlier this month, approved a proposal in this regard. The matter was later referred to the Rangarajan panel so as to undertake a detailed study as to the feasibility of such a proposal.
Govt. move provides relief to major highway developers:
This move by the government is likely to provide much needed relief to major highway infrastructure developers like GMR and GVK. In this context, it can be recollected that many of the highway projects of these infra giants had to face inordinate delays due to the high premium of about 12% that needed to be paid. Premiums have to be paid by the highway developers to the National Highways Authority of India (NHAI) under the Build, Operate, Transfer (BOT) model.
Decision regarding reschedule of premiums awaited:
The premium that highway developers have to pay the NHAI is usually decided during the bidding stage. This is normally reached at based on the projected returns that are expected from toll collections. Meanwhile, the Road Transport and Highways ministry has forwarded a proposal to the Cabinet and is awaiting a reply with regards to rescheduling of premiums to the tune of about Rs.1 lakh crore. This is across 23 highway projects that were awarded through the BOT model, for which tolls can be collected.
