Construction work on about 4,500 km of national highways, which was in limbo due to the delays in getting sovereign clearances, seems likely to begin soon. With the economic slowdown taking a toll on 28 highway projects, the National Highways Authority of India (NHAI) is likely to allow companies to reschedule their payments to the government so as to relieve them of too much stress in the initial years. This, the NHAI believes, will keep the firms interested in the projects.
The plan follows the NHAI board’s March 28 move that approved the restructuring of GMR’s premium payment to widen a 555-km highway stretch between Kishangarh and Ahmedabad, weeks after the company terminated the project.
NHAI chairman RP Singh has written to the ministry of roads, transport and highways to consider restructuring of payments for not just GMR but all the companies, provided that the net present value (NPV) of each project remains the same.
If the proposal is implemented, it will benefit major road developers like GMR, Essar, GVK, Gammon, IVRCL, Gayatri projects, Essel Infra and Era Infra among others.
According to a senior ministry official, the NHAI and the ministry of roads has been in favour of the proposal whereas two members of the board ? from the finance ministry and the Planning Commission ? are opposed to it. It is now for the road transport and highways minister CP Joshi to decide on the matter.
Sources said the ministry of roads will have to get the proposal approved by the Cabinet as the Planning Commission and the finance ministry are against any such amendment to the highway contracts.
?If the NPV remains the same, then a reschedule of the premium payment to NHAI should not be a problem. But since it amounts to reopening of a done deal, the views of the finance ministry and the Planning Commission have also to be taken into account. The ministry will now examine the proposal and take a legal opinion before tabling it before the Cabinet,? a roads ministry official said.
If the proposal is cleared, a new formula for lowering the premium payout in initial years, and a corresponding increase in the payouts in the following years will have to be prepared.
?NHAI’s funding for other highway projects is done on the estimated and committed payments by the already awarded contracts. If this assessment changes, then the entire structure of funding of other projects will also have to be changed. Thus, it will be a tough decision for the government to take,? said another official involved in the country’s infrastructure decisions.
As per the minutes of the NHAI board meeting, since a relaxation to GMR would lead to other developers also demanding similar relief, Singh has requested for an urgent consideration, the roads ministry official added.
GMR and NHAI have also moved the courts regarding the project. GMR wants to protect its bank guarantee of about R260 crore with NHAI. The case will come up for hearing in the Delhi High Court on April 30.
It was slated for hearing on February 28, when the Court was informed about GMR?s proposal to NHAI.