The panel headed by C Rangarajan, chairman of the economic advisory council to the Prime Minister (PMEAC), created to work out the modalities of premium restructuring, will have its concluding meeting on January 3. According to sources, the final meeting will be a platform for all the four departments ? national highways authority of India (NHAI), the road ministry, department of economic affairs (DEA) and the planning commission ? to put across their final views on the matter, after which Rangarajan will submit his final report to Prime minister.
Till now, the panel has seen varied views and has not been able to form a consensus. NHAI has also written to the road ministry suggesting that the contracts should be terminated ?amicably?, and rebidding should be initiated as there was already a delay of over two years. This includes scraping of contracts for about two dozen road projects, involving investments of over R40,000 crore. This will put investments by infrastructure firms such as GMR and GVK under the lens.
The terms of reference for the panel pertain to the definition of a stressed project, the discount rate that should be applicable, whether a penalty should be there and, if yes, then as suggested by the road ministry in the cabinet note, should it be 0.5% of the total project cost. Most important, should there be an additional safeguard of a bank guarantee?
Sources say the panel is stuck on deciding the discount rate. “Earlier, it was decided that a discount rate of 10.75% should be allowed, to which everyone in the panel verbally agreed but, later in a written reply, both planning commission and DEA argued for it to be increased to 12%,” sources said.
According to officials, the NHAI chief has said that the proposed formulation of premium rescheduling, even if it comes soon, may not be lucrative for most of the developers who have sought relief.
