The government is planning for a mega push to the road sector and has raised the target to award projects to 10,000 km in the current financial year, as well injecting up to Rs.4,000 crore to complete stalled projects due to fund crunch.
The plan, which is being steered by Prime Minister Narendra Modi, also includes the move to allow private developers to exit projects two years after tolling starts, a move which is likely to unlock about Rs.4,800 crore of funds. This will enable the developers to take up fresh projects as they would have some funds available with them to get loans for new works. It is also expected to help attract foreign investors as completed projects would be on offer for them. With it, the administration is keen to replicate the success of Atal Bihari Vajpayee government's road building programme.
The one time fund infusion by the National Highways Authority of India (NHAI) is expected to breathe fresh life into 16 projects worth Rs.16,000 crore. Nearly 50% work in all these projects are stalled as contractors have run out of funds and banks have stopped releasing fresh loans due to the tardy progress. The decision to allow developers to divest their entire equity from projects where tolling is on for over two years can apply to 80 public private partnership (PPP) projects, out of the total 115 PPP projects. Private players are not bidding for PPP projects since they don't have the equity they need to put for projects in order to raise loans from banks and financial institutions. “PM has observed the ministry should keep track of how this equity is being utilized by the developers. A mechanism is needed to see that the equity is ploughed back to the road projects,“ said a government official. Under current norms developers need to keep at least 26% of their equity in project for the entire contract period, which usually extends up to 20-25 years.
With the proposals getting PM's nod, the ministry has assured Modi to push construction of highways to 17-18 kms per day by 2015-16 and cross 20 km per day during 2016-17.
The plan, which is being steered by Prime Minister Narendra Modi, also includes the move to allow private developers to exit projects two years after tolling starts, a move which is likely to unlock about Rs.4,800 crore of funds. This will enable the developers to take up fresh projects as they would have some funds available with them to get loans for new works. It is also expected to help attract foreign investors as completed projects would be on offer for them. With it, the administration is keen to replicate the success of Atal Bihari Vajpayee government's road building programme.
The one time fund infusion by the National Highways Authority of India (NHAI) is expected to breathe fresh life into 16 projects worth Rs.16,000 crore. Nearly 50% work in all these projects are stalled as contractors have run out of funds and banks have stopped releasing fresh loans due to the tardy progress. The decision to allow developers to divest their entire equity from projects where tolling is on for over two years can apply to 80 public private partnership (PPP) projects, out of the total 115 PPP projects. Private players are not bidding for PPP projects since they don't have the equity they need to put for projects in order to raise loans from banks and financial institutions. “PM has observed the ministry should keep track of how this equity is being utilized by the developers. A mechanism is needed to see that the equity is ploughed back to the road projects,“ said a government official. Under current norms developers need to keep at least 26% of their equity in project for the entire contract period, which usually extends up to 20-25 years.
With the proposals getting PM's nod, the ministry has assured Modi to push construction of highways to 17-18 kms per day by 2015-16 and cross 20 km per day during 2016-17.
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