The finance ministry on Tuesday approved the Rangarajan Committee’s recommendations for rescheduling of premium payments by highway developers, in what was one of the last policy decisions of the UPA government.
Leading infrastructure companies, however, termed the norms inflexible and impractical, even as only 10 out of the 40-plus projects in need of succour may qualify for the same.
Sources said that while premium payments the industry wanted restructured amounted to Rs 1.5 lakh crore, only a small fraction of this would qualify for the scheme approved on Tuesday.
Highway developers had made a last-ditch bid to salvage their stranded projects. GMR group chairman GM Rao, sources said, had called on the Prime Minister’s principal secretary Pulok Chatterji twice in the last one month and pitched for premium rescheduling norms more liberal than those proposed by the Rangarajan Committee.
Rao, sources added, had told the PMO that the committee’s formula wasn’t good enough for GMR to return to the 555-km Kishangarh-Udaipur-Ahmedabad project.
While Rangarajan’s criteria for projects to qualify for the premium rescheduling mechanism would anyway exclude most of the stranded projects, GMR’s Kishangarh-Udaipur-Ahmedabad project (with cost estimated initially of Rs 5,387 crore) and GVK’s 321-km (Rs 2,815 crore) Shivpuri-Dewas project are among the few high-profile ones seen eligible.
In a meeting with Chatterji, Rao and his team raised concerns over the committee’s proposal to levy penalty on those who defaulted on premium payments and introduce a provision that developers of 4-to-6-laning projects must furnish bank guarantees amounting to the premium delayed (with interest) against original time-line for payment during the period of construction.
“Treating the deferred premium as revenue shortfall loan by the NHAI is an area of concern,” said a source, who did not want to be identified. If the realisable fee (premium) is less than subsistence revenue, the panel said, NHAI may provide a revenue shortfall loan to the concessionaire at 2% above the bank rate (which is 10.75%, the discount rate to make good the deferred receipt of premium by NHAI) to keep the net present value of the premium amounts unchanged from previously. GMR pointed out that the discount rate proposed by the panel and now approved by the finance ministry is high.
During the UPA-II regime, road construction and project awards had slowed down considerably. Aggressive bidding incompatible with the traffic potential of various stretches bid out (partly because of the