CCEA Approves Two Major Policy Initiatives In Highway Sector
13 May, New Delhi
In order to provide a renewed thrust to the highway sector and to bring the private sector back on board, the Cabinet Committee on Economic Affairs (CCEA), chaired by the Prime Minister Narendra Modi, Wednesday approved two major policy initiatives.
The CCEA approved a comprehensive Exit Policy framework that now permits concessionaires/developers to divest 100 percent equity, two years after completion of construction.
It is relevant to note that during the last few years, public private partnership projects have not been able to attract bids; one of the primary reasons being lack of availability of equity in the market among qualified bidders.
This decision will also harmonise conditions uniformly across all concessions signed prior to 2009 with the policy framework for post 2009 contracts which permit divestment of equity upto 100 percent, two years after completion of construction.
There are 80 such Build, Operate and Transfer (BOT) projects awarded prior to 2009 that have been completed and the locked in equity in these projects works out to approximately 4500 crore rupees.
Once this is unlocked and is re-invested in new projects this could support 1500 kms of new highways on PPP mode, thus help in reviving the response to BOT projects. Out of the ongoing 240 PPP Projects, some are languishing due to delays on account of land acquisition, grant of statutory clearances, local issues and shortage of construction materials.
CCEA Wednesday also approved a special intervention for the projects that are in the advanced stage of completion but are stuck due to either lack of additional equity or lender’s inability to disburse further.
NHAI has been authorized to provide funds to such projects from within its overall budget/corpus on a loan basis at a pre-determined rate of return. NHAI has been directed to develop a robust mechanism to determine eligibility of the project as also the extent of funds required to complete projects, in a time-bound manner.
About 16 such projects languishing in various part of the country where public is facing difficulty on account of incomplete works will benefit from this decision. This will also add momentum to the overall growth of the highways sector in India which is already on the path of revival.