A committee of ministers (CoM) has endorsed the plan to allow easy exit options to concessionaires in the road sector. According to sources, the CoM, which met on Monday, decided to allow the developer to make a 100% exit immediately after financial closure is achieved.
Currently, developers are required to hold at least 26% of equity up to two years after the date of commercial operations (CoD). The easier exit policy is expected to release funds stuck in projects awarded before 2009.
The CoM meeting was attended by finance minister P Chidambaram, road minister CP Joshi and deputy chairman of Planning Commission Montek Singh Ahluwalia. With the CoM giving its nod, it is likely that the Cabinet will clear the norms soon. As per the decision, a concessionaire who would want to make an exit after financial closure has to approach the lenders with a letter of consent and, once the lenders and the concessionaire reach an agreement, the lenders can find a new developer and approach the NHAI board for a final approval.
Until the concessionaire achieves financial closure, the role of the lenders doesn?t come into play. And, according to MCA, an exit is permissible only through the lender. The proposal for easier exit for developers was initiated by NHAI last year, when the authority suggested the option as a means to ease the fund crunch in the sector and revive investor interest.
A road ministry official said, ?Since the right of substitution is with the lenders, without declaring a default, the lenders on a mutual agreement with the current concessionaire, will propose to NHAI and the ministry of roads the wish of the current concessionaire to make an exit and, then, the lenders will have the right to chose a new developer.?
