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Govt clears two major policy initiatives for highways sector

14 May 2015 Evaluate

The government has cleared two major policy initiatives to give a fresh thrust to the highways sector and bring the private sector back on board. The Cabinet Committee on Economic Affairs (CCEA) has given the go-ahead to a comprehensive exit policy for developers aimed at improving the availability of funds in the market and also authorised the National Highways Authority of India (NHAI) to intervene in projects that are near completion but stuck due to a lack of funds.

The government has extended the relaxed exit policy for highway developers to public-private partnership (PPP) projects awarded before 2009. The exit policy would help unlock equity from completed projects making it potentially available for investment in new projects, harmonising conditions uniformly across all concessions signed prior to 2009 with the policy framework for post-2009 contracts which permit divestment of equity up to 100 per cent two years after completion of construction.

The CCEA has also approved fund infusion by National Highways Authority of India (NHAI) as loans in PPP projects which are at advanced stages of completion, but stuck due to lack of additional equity or lenders’ reluctance to provide more loans. The loan was to be recovered along with interest from the toll receipts immediately after the completion of construction. The 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.

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