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Govt will revive distressed highway projects with easier terms for developers: Oscar Fernandes

K R Balasubramanyam     December 27, 2013
The Centre will rework the terms of concession relating to national highway projects that have run into trouble and get them moving again, Union Minister for Road Transport and Highways Oscar Fernandes told Business Today's K.R. Balasubramanyam.

According to him, there are 20 public-private partnership projects that are under stress because the developers concerned have not signed agreements with the National Highways Authority of India (NHAI) after winning the contracts in competitive bidding.

Fernandes, who hails from coastal Karnataka, said his ministry was looking for ways to revive the highways projects that have not taken off because the developers are finding it difficult to raise funds in the current economic situation. The government might restructure the bid norms by relaxing the terms for premium payable by developers or by extending the term of the contracts, or both.

A committee, headed by C.Rangarajan, Chairman of the PM's Economic Advisory Council, has gone into the problems the affected road sector projects face, and come up with a bailout formula. It has suggested re-scheduling premium payments, keeping the net present value (NPV) intact. The government will soon take a decision and kick-start the distressed projects, Fernandes said.    

If some developers are reluctant to go ahead with their projects even after the restructuring, their projects will be awarded by the NHAI in the EPC mode (engineering, procurement and construction). In such projects, the government awards maintenance of the road and toll collection to private players through a tender process.   

Banks are willing to fund only such projects where 90 per cent of the land acquisition is complete. Fernandes said he had thus asked the chief secretaries of states to take ownership of the land acquisition process in their respective states. Courtesy: Mail Today

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