The finance ministry has agreed to a proposal by the road ministry and the National Highway Authority of India (NHAI) to allow developers easier exit options.
Once the proposal gets a Cabinet nod, it would allow concessionaires to exit road projects at any point of time.
For instance, concessionaires would be able to leave the project whenever they think it has turned unviable or are unable to handle them due to financial reasons.
However, concessionaires would need to get the lender’s clearance before exiting the project if financial closure has been achieved.
Another condition placed on the concessionare is that it would have to get a replacement in the project. Once this mechanism is put in place, the NHAI would not forfeit the performance bank guarantee and the concessionaire would not drag the government into any litigation. The model concession agreement (MCA) for road projects, which is currently in force, allows pre-2009 concessionaires to exit 74% of their stake in any road project only after completing two years of commercial operation date.
Sources said the new concessionaire should be acceptable to both the lenders of the project and to the authority. ?This clause is must as the lenders interest is prime for the government and for the authority being the sovereign guarantee of the project, a nod from the authority will help in securing the interest of the developers,? said an official.
The Cabinet nod would allow strict screening of credentials of the incumbent developer/party. ?Earlier, this was not a condition as divestment was allowed only after two years of COD, but since it is now proposed to permit divestment immediately after COD, the NHAI would satisfy itself about the credentials of the party taking control of the management of the project.?
