Govt to compensate infrastructure developers for project delays

By: | Published: November 18, 2015 8:58 PM

The government today unveiled two key policy initiatives to revive the infrastructure sector, which include compensating developers in case of delays in highway projects...

The statement said NHAI will be authorised to pay compensatory annuities to the concessionaire corresponding to the actual period of delay not attributable to the concessionaire upon successful completion of the project. The statement said NHAI will be authorised to pay compensatory annuities to the concessionaire corresponding to the actual period of delay not attributable to the concessionaire upon successful completion of the project.

The government today unveiled two key policy initiatives to revive the infrastructure sector, which include compensating developers in case of delays in highway projects and empowering the ministry concerned to okay projects with civil construction cost of up to Rs 1,000 crore.

The decisions, which will benefit at least 34 key highway projects, were taken at a meeting of the Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister Narendra Modi here today.

These follow recent decisions like allowing developers to divest 100 per cent equity in projects two years after the completion of such schemes to unlock investments worth about Rs 4,500 crore in the sector.

“The Cabinet has taken a very bold decision to allow the Ministry of Road Transport and Highways to go into the merit of each case and wherever the delays are not attributable to the developer, extend the tolling period,” Coal and Power Minister Piyush Goyal said while interacting with the media.

Goyal expressed hope that the decision will fast-track highway projects.

“CCEA has given its approval for authorising the National Highways Authority of India (NHAI) to allow extension of concession period for all current projects in BOT (toll) mode that are languishing during the construction period due to causes not attributable to the concessionaire,” an official statement read.

It said such permission will be subject to condition that the tenure of the operation as laid down originally in the concession agreement will remain unchanged and the decision on eligibility of projects for extension of the concession period may be taken by NHAI on a case to case basis.

The statement said NHAI will be authorised to pay compensatory annuities to the concessionaire corresponding to the actual period of delay not attributable to the concessionaire upon successful completion of the project.

The number of annuities payable, including compensation, will be capped.

“By adopting the policy, all major stakeholders in the PPP arrangement would have an increased comfort level, resulting in revival of the sector and this will bring relief to citizens /travellers,” the statement said.

The statement said the main object of the proposal is to revive languishing highway projects in the country while the dispensation will not be applicable to those BOT projects where tolling is permitted from the commissioning date.

In a related decision, the government empowered the Road Transport and Highways Ministry to approve projects with civil construction cost up to Rs 1,000 crore.

This will be implemented by segregating civil construction cost from capital component of projects.

“… all NH projects with a civil construction cost of up to Rs 1,000 crore shall be appraised by the secretary, Road Transport and Highways, and approved by the minister,” the statement added.

“By adopting the policy, the avoidable delays in the process of appraisal and approval of NH projects will be suitably addressed. Speedy appraisal and approval will help in meeting the award target of 10,000 km set for this year.”

Multiple stages of scrutiny and appraisal of the same project at different levels cause avoidable delays in award of highway projects.

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