Reliance Infrastructure shares surged over 4 per cent on Friday following government’s decision to revive the construction sector with various measures including government agencies paying 75 per cent of the arbitral award amount to an escrow account against margin free bank guarantee, in those cases where the award is challenged. The escrow account can be used to repay bank loans or to meet commitments in ongoing projects, which will allow construction companies to speed up execution of ongoing projects.
Reliance Infrastructure shares closed 4.39 per cent up at Rs 612. The scrip opened at Rs 587.70 and touched a high and low of Rs 618.90 and Rs 584, respectively. In the past one year, shares of Reliance Infrastructure gained nearly 80 per cent to Rs 586.25 on September 1. The scrip was trading at Rs 331.80 on the same day last year.
In a BSE filing, the company said that Reliance Infrastructure has already won arbitration awards for two Road projects of Rs. 170 cr. In addition, over Rs. 14,000 crore are under advanced stages of arbitration for various projects.
“Welcoming the move, Lalit Jalan, CEO, Reliance Infrastruture, said, “This landmark initiative by the CCEA will boost the stressed infrastructure sector and also help infuse much required liquidity in the system. It is a very positive and bold move by government to help revive the stalled projects which suffer due to long settlement periods.”
Jalan also lauded government’s initiative of allowing the disputing parties to migrate to new Act even if arbitration was initiated prior to enactment of amended Arbitration Act of 2015.