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NHAI seeks easier exit norms for road builders news
24 January 2013

Responding to demands by highway construction companies to allow them to disinvest from the highway projects once they are completed, the National Highway Authority of India (NHAI) is formulating a new policy that would allow the construction companies to exit as soon as the project is commissioned, says a report.

The new policy is presently stuck with the inter-ministerial group consisting of ministry of road transport and highways, law ministry, finance ministry and the planning commission, according to Business Standard.

The NHAI has also favoured the demand that concessionaires having signed contracts before 2009 be allowed complete disinvestment. The then contracts mandated that the companies maintain 26 per cent equity in the project for the entire concession period.

The Planning Commission and the finance ministry have, however, objected to the move, says the report.

An official of the planning commission said that it was not in favour of reopening older contracts as the ''sanctity should be maintained''. Moreover, he maintained that the existing policy is quite liberal already.

The existing policy allows complete disinvestment after two years of commissioning of project, during which time the builder has to maintain 26 per cent equity.

A clause to build-operate-transfer (BOT) projects awarded before 2009 requires the concessionaire to maintain 51 per cent equity throughout the time of construction, 33 per cent in the three years followed by the COD, and then at least 26 per cent in the rest of the concession period.

The highway developers have raised concerns that equity locked up in the older and existing projects is making them cash-strapped and hurting the funding of new projects.

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NHAI seeks easier exit norms for road builders