Private highway developers petition govt for relief

September 25, 2013

Dipak Kumar Dash, TNN |

NEW DELHI: Private highway developers are trying to extract maximum “relief” from government, citing the continuing economic gloom that has impacted their projects. Road builders who have started 16 premium projects including IRB, L&T, Reliance Infra, Ashoka Buildcon and Essel Infraprojects want the government to allow rescheduling of annual premium payment as is being considered for 23 other “stressed” projects.Highways ministry has sought Cabinet approval for rescheduling of upfront annual revenue or “premium” in case these stressed projects.

After receiving a proposal from National Highway Builders Federation (NHBF) and IRB that the proposed premium rescheduling scheme should be extended to all premium projects.NHAI has asked the ministry to put a supplementary note for Cabinet’s consideration. NHBF has said, “Selective approach in allowing rescheduling of premium will invite litigation and any policy amendments needs to be extended to all premium projects awarded, irrespective of these projects have been issued appointed date and started construction or not and allow the concessionaire who are opting for this scheme.”

It added any litigation on this issue may derail the scheme and will in turn affect the revival of this sector. NHBF has said due to economic slowdown last year and rate of GDP growth plummeting to a decade low 5% have impacted toll revenues as low as 50% than estimated in majority of projects.

According to NHAI sources, the premium committed in case of already started 16 projects comes close to Rs 55,000 crore in the next 20-30 years and developers of the yet to be started 23 projects have committed to pay Rs 1 lakh crore to the authority.

Ministry officials said it’s impossible to add fresh ones to the list of identified “stressed” projects since a consensus has already been achieved among law, finance and road ministries to allow premium rescheduling of 23 projects including GMR’s Kishangarh-Udaipur-Ahmedabad highway. “By bringing in more projects under this list we will open a new window for debate and objections. How can we say that projects where work has started are under stress?” asked a ministry official.

Moreover, the signal that economic affairs secretary Arvind Mayaram sent on Monday on premium rescheduling at a FICCI summit indicates the amount of heat this new proposal may generate. He had said that to avoid “moral hazard” because of this move, there is need to identify “stressed” projects objectively and to have a methodology.

He had added that there is need to find out whey the particular projects are stressed. “If it’s because of authority’s default then they must take the haircut. We can’t brush it under the carpet. If the developer is at fault then it must take the haircut,” Mayaram had said.

The expenditure secretary had also said that there is need of a regulator to deal with such issues objectively.

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