Highway developers have urged National Highways Authority of India (NHAI) to widen compensation coverage and treat coronavirus impact at par with demonetisation.
National Highways Builders Federation (NHBF) has requested NHAI to extend coronavirus-related relief to all operating projects regardless of them being old, and not keep it limited to model concession agreement (MCA). The industry body says there has been an unprecedented drop in traffic. Various states ordering lockdown, despite Centre lifting traffic restrictions, has made the situation worse for highway developers and operators.
It has pressed for treating the pandemic-afflicted lockdown as Political Force Majeure event and demanded more support from NHAI. "In a similar event during demonetisation period and toll suspension, 90% of the operation and maintenance (O&M) costs were immediately released as support. We are awaiting such a measure and clarity in this regard. The event is exactly similar to demonetisation time toll suspension," the NHBF is understood to have claimed.
Sources said that private highway developers are of the view that suspension of toll collection falls under the category of Political Force Majeure event as per MCA. The highway developers want concessionaires to be suitably compensated in terms of extension of concession period, compensation for O&M costs, interest cost and premium waiver among others. Demanding longer extension in concession period, the NHBF says the NHAI circular asking parties to wait until the impact of Force Majeure is over adds to the uncertainty.
"You may recall that in a straight forward toll suspension case during demonetisation, extension relief is yet to be granted after 3 years. Therefore, we would suggest that the allowable 6 month period be granted as a one time relief measure for the sector to survive," the industry body has written to NHAI Chairman SS Sandhu.
Providing much needed relief to BOT (build, operate and transfer) toll projects' developers, the NHAI had late last month decided to extend concession period for the number of days toll collection remained suspended. It also promised to compensate for the period during which tolling was allowed but collection was less than 90% of the daily average.
Following the announcement of nationwide lockdown to contain coronavirus, the NHAI had suspended toll collection from March 26 to April 19, 2020. A concessional Covid-19 loan is also being extended to operators for tiding over the crisis. NHAI will disburse the soft loan within 60 days of receiving a valid request from the concessionaire. The loans would be granted only where the parties to the contract were not in default of the contractual obligations as on February 19, 2020.
Pointing out that the RBI has only given moratorium on loans and no waiver of either principal or interest, the NHBF has said that that NHAI should factor this while assessing the revenue shortfall. "Kindly allow inclusion of debt payment liability as the liability continues, but is a matter of time. By the time loan is disbursed in 60 days (as indicated), these debt repayments could fall due," the NHBF said.
Sandeep Upadhyay, MD (Infrastructure Advisory) Centrum Capital Ltd said that the relief measures suggested should be passed onto the affected party in defined course of time with minimum procedural and administrative delays. "Some of the demands from the stakeholders in terms of compensating for actual O&M expenses, clarity sought around the force majeure clause and expanding the definition of qualifying projects are reasonable and should be re-considered by the authority," he said.
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