Govt is keen to kick start stalled projects: Gammon Infra

National Highways Authority of India (NHAI) has approved a proposal to restructure the premium payment for GMR Infra to widen a 555-km highway stretch between Kishangarh and Ahmedabad.

GMR which had exited the Ahmedabad project citing it is a financially unviable project, has now indicated fresh interest in the project, provided premium terms are tweaked. If ths proposal is okayed by the government, GMR will have to pay about Rs 59,000 crore instead of Rs 32,000 crore to NHAI over the 26-year period, when this road projects starts tolling. The numbers have gone up as the premium payout has been back-loaded Sector players find this move positive as the government and its agencies are keen to make the entire system more effective. In an interview with CNBC-TV18, KK Mohanty Managing Director, Gammon Infra said that though it is too early to comment before anything concrete happens, it is certain that government is keen on kick-starting stalled road projects. Read This:  Buy GMR Infrastructure, says Sukhani Below is the verbatim transcript of his interview on CNBC-TV18 Q:. Do you think this restructuring is a start of a fairly positive trend and will many road contractors avail of this flexibility provided by NHAI? A: It is too early to talk about anything concrete happening on this end. However, one satisfying thing is that the government and the government agencies are keen to kick-start the economy, to make the whole system more effective and is handholding the entrepreneurs to get going with the infrastructure projects. That is the only positive takeaway at this stage but finally what will happen is anybody’s guess on whether it will go through, whether it is logical, legal and whether it will get approved, get implemented etc that is still a long way to go. Q: Going by a report and what NHAI had to tell us that it is not a project specific case. They will continue to do that in future as well if of course this gets the cabinet nod. A hypothetical question is going forward if indeed this becomes a reality then would you also participate in more such projects? Do you think one big bottleneck would be out of the way? A: It is very difficult to comment at this stage because this will have to stand the scrutiny of not only the executive process but also the scrutiny of legal process and fairness of public bidding. That is my major concern. Q: A hypothetical question is what will happen if it passes all these hurdles? A: If it passes all these hurdles then we might have to come back and evolve as a public–private partnership (PPP) structure where each and every concession agreement is negotiated rather than being pre-decided standard concession agreement. So, this tantamounts to what today is practiced in western countries. However, in India since we have large number of projects we have standard concession agreement. If you start tinkering with it, start renegotiating and discussing it then the system has to evolve on how to negotiate a concession agreement and sign it. Q: So you expect it will be challenged legally by others who lost the bid? A: As an industry player, I expect that things should evolve and develop into a positive way so that less and less projects are stalled. That’s the way we look at things to evolve, so that the industry is helped and country as a whole, goes in a positive economic direction. Q: Chances of litigation are there you think? A: I am not judging anything. I am just saying that we might have to evolve towards a system of each concession agreement after the bidding is negotiated and redrafted and done, which is practiced in the western countries where the PPP structure has matured. But it has to evolve as a system and policy. Q: Four-five years back build-own-transfer (BOT) were the top projects, what is your sense of the current scenario and what is your involvement at this point in time with BOT projects? A: There are two types of challenges. One type of challenge that we have experienced in last one and half years is that all the projects which were bided and awarded in 2011-12, still the work has not started though it is now FY13-14. Earlier it used to get started within six months timeframe, in the same set of policies and guidelines and government agencies, no policies have changed. However, the situation has changed in a manner, the projects which were getting started in six months, now even in one and half year none of the projects have started. The second situation is that the market has not matured, so industry players is some cases might have not realised what they have bided for and gone more aggressive than they could manage. However, even as a private player my view point is nowhere there is government to bail out a private player. If somebody has made a mistake, he himself has to balance it out with the positives and negatives. The only thing in which way the government can help is to remove the bottlenecks of cash flows, decision processes, land acquisitions, forest clearances etc so that the private player does not unduly suffer in the projects where he has really made no mistake.