The Cabinet Friday approved a long-pending proposal from highway developers allowing them to fully exit the project or partially divest equity in the road project after approval from the stakeholders.
With this step, the Cabinet Committee on Economic Affairs (CCEA) expects that implementation of road infrastructure in the country can be expedited and also NHAI will be insulated from heavy financial claims and unnecessary disputes.
"The proposal aims at revival of the sector by facilitating substitution of Concessionaire in case of both ongoing and completed projects, in both these cases, appropriate substitution of the Consortium Member(s) of Concessionaire for project, therefore, shall require to be effected by the Lenders with the consent of NHAI.
"In view of the prevailing lack of interest among prospective bidders for highway projects under the PPP mode and difficulties faced in achieving financial closure for such projects awarded in the recent past in an already subdued investment climate, it has been decided that existing Concessionaires both in case of completed and on-going projects be permitted to divest their equity in totality. This would bring about required flexibility for existing Concessionaires in terms of exit options," said an official release.
This is proposed to be made applicable both for already awarded projects that have achieved appointed date and projects to be bid out in future, as per the prescribed mechanism.
Two types of mechanisms have been adopted for substitution: Firstly, subsequent to the substitution, the leading substituting entity shall be required to maintain at least 51 percent equity holding in the project special purpose vehicle. The second one is that substitution shall require the prior approval of lenders before implementation.
Apart from this, the CCEA has also given its approval for two-laning of the Uniara-Nainwa-Hindoli-Jahajpur-Shahpura-Gulabpura section of NH-148D in Rajasthan under the National Highways Development Project (NHDP) Phase IV, on Engineering, Procurement and Construction (EPC) basis. The project cost is estimated to be Rs.774.33 crore. The total length of the road will be approximately 204 km.