Moneycontrol
Mar 16, 2017 03:58 PM IST | Source: CNBC-TV18

Banks raise concerns over funding of EPC projects: Sources

Even as the government gives high priority to EPC projects, banks have expressed concerns about aggressive bids by debt-ridden infrastructure companies.

Ashpreet Sethi

The Union road ministry's push for engineering, procurement and construction (EPC) projects has a hit a roadblock with banks raising concerns over funding, reports CNBC-TV18's Ashpreet Sethi quoting sources.

Sources said that in a meeting last month, bankers had voiced their concerns to the ministry about aggressive bids by debt-ridden infrastructure companies.

Currently, 20 EPC projects are stuck.

EPC projects are mostly funded by the government, with infrastructure companies needing to get bank guarantees to provide additional capital.

But banks have expressed reluctance to provide credit and raised concerns over how the projects will be completed.

The road ministry has assured the banks that there will be no problems.

In an interview to CNBC-TV18 on Wednesday, Union road transport minister Nitin Gadkari had said high priority is being given to EPC projects, as the sector continues to struggle. A rebound of the EPC projects will be a positive sign for all investors, he had said.

Gadkari also said that many of the projects which have been sanctioned by the road ministry are currently facing land acquisition problems. He said financial closure is another issue that is being faced by the highway sector, but he said it would not be a problem in achieving targets.
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