More power for lenders in road sector PPPs soon

Feb 05 2013, 03:39 IST
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SummaryLenders are set to get more flexibility in public-private partnership projects in the road sector, where investor interest is waning.

not have any security or any say as per the current MCA. Thus, the proposed changes will give additional powers to lenders from their ability to secure their money.”

“This amendment will not just revive the interest of banks, but also make them less apprehensive to lend further to road developers,” said Vishwas Udgirkar partner, infrastructure, at Deloitte.

Lack of financing is becoming a major hindrance for road projects. With developers exhausting all avenues to raise equity financing, funding by banks and FIs remain key to projects achieving financial closure. However, banks worry their money may not be secure, with developers increasingly relinquishing or terminating projects. Last year, several road projects were bid on premium. With the economic slowdown and high interest rates, many of them are finding it tough to meet their commitments. Developers like GMR, GVK have already terminated some of their projects citing lack of clearance from NHAI.

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