projects comprise 53.4% of all public-private partnerships, entailing over Rs 1.76 lakh crore investments. Several infrastructure companies have borrowed overseas for special purpose vehicles developing the projects, increasing debt levels.
Road builders also point to the large number of projects awarded in the last three years which has led to insufficient credit availability and consequent difficulty in achieving financial closure.
“Raising equity through initial public offers or follow-on offers seems unlikely due to poor market conditions. Banks are reluctant to lend either,” Murali said. “Lenders who used to readily finance road projects have woken up to the non-availability of adequate equity and heightened risk perception in the road sector. Highway finance comes only with pre-conditions like 100% right of way and environmental, forest and wildlife clearances in place,” he added.