According to union minister, Nitin Gadkari, the government has already revived projects worth over Rs three trillion
The Centre is planning to resolve “stuck” highway projects worth Rs 30,000 crore by allowing agencies like NHAI and NHIDCL to “foreclose” the contracts of such projects.
According to a report by The Times of India, a policy circular issued by Ministry of Road Transport and Highways on March 9 gives the power to these agencies to foreclose project contracts by signing a supplementary agreement.
“The authority would make the full and final payment to the private player for the value of work done or 90 percent of the debt due, whichever is lower,” the report said quoting the circular.
The circular has defined stuck projects as those “where work has stopped due to inability of the contractor or concessionaire on account of proceedings initiated against them at NCLT or default on account of both the client, i.e., NHAI, NHIDCL or PWD and the private player”.
While National Highways Authority of India (NHAI) is the apex agency to construct highways across the country, the National Highways and Infrastructure Development Corporation (NHIDCL) was set up to specifically construct highways through hilly and geographically difficult regions such as the North East and Jammu and Kashmir.
“Almost all the stuck projects are the ones that are being implemented on build-operate-transfer (BOT-Toll) mode,” officials from NHAI told the daily.
According to union minister Nitin Gadkari, the government has already revived projects worth Rs 3.85 lakh crore to avoid the piling up of bad loans.
According to the new circular, the move is aimed at “unlocking huge sums of money” of, both, lenders and private players. The move will also cover projects that are being heard at National Company Law Tribunal (NCLT).
“Once the private player exits, we can invite bids for completing the project and start work. The lenders would also get back some portion of the loan rather than losing the entire amount,” an official said, adding that the circular would address the downside of the present agreement, which is that the concessionaire doesn’t get his/her money back if the project is stuck due to the contractor’s fault.Sources told the daily that government could use the same template to revive projects in sectors such as power and coal.
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