Road developers wait for Cabinet decision on Tuesday

October 8, 2013

Dipak K Dash, TNN |

NEW DELHI: Almost all major road developers including GMR, GVK, IRB & L&T are keeping their eyes on the Cabinet meeting scheduled for Tuesday when the Cabinet Committee on Economic Affairs (CCEA) will take up the contentious issue of premium rescheduling of about 40 projects awarded since 2010-11.

Out of these total projects work has started in the case of 17 stretches. Though all these months the road transport and highways ministry had been taking up the issue of only 23 projects where work is yet to start, the Cabinet Secretariat has received a supplementary note from the ministry. IRB had been raising the demand of extending the rescheduling scheme to all premium projects awarded post April 2010.
Premium is annual upfront payment that developers give to NHAI during the entire contract period in the case of lucrative projects.

Sources said the ministry has sought Cabinet’s approval for providing relief to road developers who have either started or are yet to undertake expansion work on project which are under “stress”. They added the stressed projects would be decided by the NHAI Board, which has representatives from highways and finance ministries besides the Planning Commission.

The ministry has proposed three options for Cabinet’s consideration. Sources said that the first proposal is to scrap all the 23 yet to start projects. Second option is to allow rescheduling of premium so that developers can take up work. The third option is to extend the relief to all premium projects.

The logic behind the third option is that those who have taken up work should not be penalized for going ahead while in many such cases the toll revenue have fallen due to bad economic condition.
Economic growth has direct relation to the toll revenue on roads.

Source-http://timesofindia.indiatimes.com