Highways Ministry’s Rescue Package for Beleaguered Projects
The Highways Ministry which had earlier extended its rescue package to 23 highway projects specially identified, has revised its decision so as to benefit all struggling highway projects. As per the revised plan, the highways ministry has requested the Cabinet to entrust the National Highways Authority of India (NHAI) with the task of identifying the projects that require immediate respite. However, highway developers are finicky about this proposal as they feel that it could invite litigation. They have written to the NHAI in this regard cautioning the government against such a move.
Empowerment of the NHAI board:
However, a supplementary note favouring this option has already been send to other ministries. This point of view reinforces the suggestion put forward by the Road Transport and Highways Minister with regards to empowerment of the NHAI board. It is felt that such a move will enable the board to play a larger role with regards to executing vital decisions in future.
Devising a formula to select projects:
With the intention of devising a particular formula so as to determine the projects that fall under the category of being stressed, the Highways Ministry has requested the assistance of the Cabinet. Based on this formula, the projects thus identified will be allowed to restructure their premium payments quoted during the time of bidding for the project. This information was quoted by an official familiar with the development process in this regard.
Eligibility criteria:
As per the formula that would be devised to select projects that are eligible for relief, those that fall under the category in which NHAI has been unable to fulfill its obligations or due to conditions precedent in the model concession agreement would be eligible for the relief offered by the Highways ministry. Under the constraints set by the Highways ministry, the NHAI board can, after the necessary deliberations, come up with a suitable solution to this issue. The decision thus taken can be implemented after the necessary approvals are received from the Highways ministry. The main advantage of this proposal is that, it will help to ease the financial flow in projects, thereby enabling lenders to recover their debt payment. It will also benefit NHAI as they will be able to recover the premium at a later date, along with interest.
