NHAI to fund the stalled road projects to clear off the initial hurdle
There are many infrastructure and road projects which are stuck due to lack of money and the National Highways Authority of India (NHAI) has decided to soon roll out a proposal to take over such stalled projects. NHAI will run these projects for a few years to recover the funds infused and then will hand them back to the promoters who were initially allotted these projects.
In such situations NHAI will first obtain a no objection certificate (NOC) from the lender to the project as well as the concessionaire (the promoter) and put in the requisite funds to complete construction. This decision is based on the advice of the ministry for road transport and highways.
Since NHAI had funded the last leg of the project, they will collect the toll till they recover the funds used for that project and then hand it back to the concessionaire, who will operate the project for the remaining period of the concession.
Using this route, such stalled projects will not become non-performing assets and the interests of both lenders and the concessionaire will be protected. Officials believe that the ministry came up with such a suggestion after experiencing the proceedings in the Jaipur- Gurgaon expressway to which a consortium of lenders had given approximately Rs 1,800 crore of loans.
When NHAI reached out to the banks offering them to take over the project, the banks suggested that they were ready to lend the money directly to the sub-contractors working on the project for them to complete the project. There is a shortfall of about Rs 500 crore for the Jaipur-Gurgaon expressway, and NHAI may not follow the above mentioned model in this case. NHAI is working on the model and will soon present it to roads minister Nitin Gadkari.
VinayakChatterjee the chairman of Feedback Infra mentioned that this move is a good one and it would benefit the developer, the lenders, the government and consumers who are suffering despite paying tolls.
Source- The Financial Express
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