The government on Wednesday extended the relaxed exit policy for highway developers to public-private partnership (PPP) projects awarded before 2009. The concessionaires will be allowed to completely exit projects two years after they completed the construction, a move that will free around R4,500-crore equity immediately, suffice to support 1,500 km of new projects in the PPP mode.
The Cabinet Committee on Economic Affairs has also approved fund infusion by National Highways Authority of India (NHAI) as loans in PPP projects which are at advanced stages of completion, but stuck due to lack of additional equity or lenders’ reluctance to provide more loans.
The UPA government had, in July 2013, allowed 100% exit for developers of post-2009 projects. Earlier, a developer had to retain 26% equity in his project during the concession period, which led to several of them getting locked up in existing projects, while bids for new projects elicited little response.
Due to lack of equity among qualified bidders, PPP projects were not attracting sufficient bids during the last five years and some high-profile developers walked out of projects. An inadequate growth in traffic made several projects, which had received aggressive bidding, unviable.
The government’s move will allow developers of PPP projects, where concessions were signed before 2009, also to quit the projects completely. Around 80 projects developed on the build, operate and transfer (BOT) mode would have the developers substituted while extant players can take up new projects, sources said. With the PPP sector languishing, the government and NHAI have been trying to push the conventional EPC model involving 100% government investment. Road transport and highway minister Nitin Gadkari has said that in a year from now, 30 km a day will be added to the road network.
“Once this is unlocked and is reinvested in new projects, it could support 1,500 kms of new highways in PPP, thus help in reviving the response to BOT projects,” the government said.
Keeping in mind the need to salvage 16 road projects languishing for want of fund, out of the ongoing 240 being built in PPP, the government has also authorised NHAI to provide funds to such projects from within its own corpus on a loan basis at a pre-determined rate of return. The loan was to be recovered along with interest from the toll receipts immediately after the completion of construction.