Highways ministry seeks prior CAG nod to avoid rap

September 18, 2013

Dipak Kumar Dash, TNN |

NEW DELHI: To avoid controversies like 2G and coal block allocations, the highways ministry has taken the opinion of the Comptroller and Auditor General (CAG) before pushing the proposal to alter contract conditions to revive stuck projects. These involve premium (upfront payment) of around Rs 1 lakh crore to NHAI.The highways ministry has even included CAG’s opinion in the Cabinet proposal to get a go-ahead to reschedule the premium where developers can be allowed to pay lesser premium in the first few years and increase the installments substantially later. At least 25 projects including the largest – Kishangarh-Udaipur-Ahmedabad – promising Rs 32,000 crore premium in the next 26 years are stuck.

The issue of rescheduling premium started when GMR moved such a proposal. When the highways ministry sought opinion of CAG, the auditor said, “Such rescheduling is not consistent with the concession agreement and hence will have implications for the bidding procedures adopted to determine the concessionaire. The legality and other aspects of the process as in the proposed review will have to be decided by the ministry.”

Subsequently, highways ministry had sought law ministry’s view. First, it had turned down the proposal saying it was legally unsustainable, but in the second round said that the ministry should take up the issue with finance. Finance minister P Chidambaram gave conditional approval with a dozen of riders including only extremely “stressed” projects should get this “one-time exception” without impacting the net present value of premium and there should be a provision of “penalty” on those seeking this relief.

Based on this conditional go ahead, the law ministry recorded they have no objection to the tweaking of contract norms, sources said.

But considering that altering already signed contracts can become an issue during audit the ministry has put the proposal before Cabinet seeking decision at highest political level to avoid chances of facing allegation from the CAG or anti-corruption watchdog CVC at a later stage.

The ministry has sited two sides of the proposal. First, if the premium rescheduling is turned down, the NHAI will have to terminate contracts and rebid them. In that case, there is little likelihood of bidders offering premium in the prevailing economic condition. Secondly, if the proposal goes through then majority of the projects might roll out soon.

Source-http://timesofindia.indiatimes.com