Govt to review norms for financially-stressed highway projects

23 Dec 2013


The government proposes to reschedule premium obligations of the developers of some of the financially-stressed highway projects that are under various stages of execution or are abandoned by the developers owing to various reasons.

The government move comes in the backdrop of near stagnation or a lack of progress in implementing a majority of the 53 projects for developing 6,415 km of highways, awarded during the UPA's second term.

While a majority of these are stuck due to financial reasons, some 4,000 km of projects where construction is yet to start the reasons are mainly regulatory roadblocks or non-availability of land.

The National Highways Authority of India (NHAI) has awarded these projects on a design, build, operate basis and developers have secured the right to collect tolls on the basis of the premium they offered to pay.

But, with projects stuck on regulatory bottlenecks and land acquisition, developers find themselves in a position where they cannot afford to pay any premium for the projects while project delays also delay cost recovery. Developers have refused to start work on some 31 projects awarded in 2011-12.

These include projects awarded to some major infrastructure firms such as GMR, GVK, Ashoka Buildcon and KMC Constructions who have served termination notices to the NHAI.

The government is working on an incentive programme under a rescheduled payment period for premium obligations of developers.

Under the revised schedule, developers may be allowed to pay 25 per cent of their original premium outgo for the first three years and 50 per cent in the following years, provided they discharge the entire obligations three years before the concession period of 20-30 years.

The government will, however, charge an interest on the delayed premium payments.

Meanwhile, the government has notified that the rate of fee for a section of a four-lane highway shall on and from the commencement of the work relating to upgradation to six laning, be seventy-five per cent of the fee applicable on the date of commencement of the National Highways Fee (Determination of Rates and Collection) Amendment Rules, 2013, till the completion of the project without any annual revision.  Further no user fee shall be levied for delayed period.

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