Exit Policy amended and relaxed for Road developers
There shall be relaxation in the rules for road developers as has been declared by the government. New norms can help road developers in selling completed projects or complete unfinished ones and in turn free them to invest in new projects which are unable to find takers in the recent years.
As per the recent reports, a stake worth almost 26 percent is presently held in highway projects by the developers for to which they are now bound. Relaxation in the rules will help in development and completion of the projects or selling them too.
What are the norms?
According to the Cabinet Ministry, a fresh note has been issued which will enable all investors and developers to make a total exit from their existing projects within the coming two years taken from the date of commissioning. The change that has been proposed for the exit policy is likely to be implemented on highway projects that were agreed on before the year 2009.
Benefits foreseen:
The roads and highways sector has been in a slump for the last five to six years. Most private companies have steered clear of bidding or investing in these projects for not wanting to undertake certain liquidity issues or tackle excessive debt. Analysts believe that this change in the exit policy can help unlock capital in the road sector.
Between the 2012 to 2014 period, not even one response was received out of the 21 ongoing projects. The National Highways Authority of India also took firm steps with regard to cancelling around 23 projects at the same time and these covered an area of about 2, 500 kilometres.
Leader-Capital Projects and Infrastructure, PwC India, Manish Agarwal says how such a revised policy will be beneficial in bringing in investment flow to the sector which would also depend on how viable a particular project actually is. Attractive valuations have been estimated by investors for distressed projects after this relaxation.
Previously, restrictive exit policy prevented the NHAI from inviting foreign pension funds or private equities like well known SBI Macquarie to invest in the completed projects. The amendment of the aforementioned exit policy will now allow all concessionaires to divest off their total stakes in completed or ongoing projects at any possible stage.
Companies Interested: The National Highway Authority of India, NHAI has also received interest in taking over completed projects from reputed companies such as Tata Group, Piramal Enterprises, Reliance Infrastructure etc. to name a few.
Source: Economic Times
foreign pension funds, highway projects, National Highways Authority of India, New norms, NHAI, Norms, private equities, projects by the developers, Road developers, roads and highways sector
