The government has approved one - time financial assistance for ‘physically incomplete and languishing’ national highway (NH) projects. The highway projects which will be eligible for this assistance are those where construction has been 50% completed till November 2014. The one-time infusion will help complete around 15 projects, involving about Rs 15,000 crore of investment. This will be executed through a tripartite agreement between the funding agency, the National Highways Authority of India NHAI and the concessionaire. The move could act as an impetus to the ailing highway sector.
The assistance will be provided on a loan basis at bank rate plus 2%. A robust third-party evaluation mechanism will be developed by the NHAI to determine the eligibility of the concerned project and the extent of bridge fund required to complete it. All such cases and the bridge fund required in each case shall be approved by the NHAI, on a case to case basis. This is expected to revitalize the highways sector.
Further, the conditions being offered to concessionaires, including the interest rate, are also on the softer side. The concessionaire seeking such relief will approach NHAI with an application clearly stating the financing plan required for completion of the project construction and justifying the infusion.
After steel sector, roads sector has the highest Non Performing Assets (NPAs) for banks. Recently, the government approved an exit policy for highway developers planning to exit the project after two years of completion. Policy decisions such as the recent exit clause and now the fund infusion will help the stressed assets. Since Prime Minister Narendra Modi took up a charge in May 2014, the number of stuck projects was nearly 77. Out of which, 34 contracts have been cancelled where work did not start, three have been terminated and 16 are languishing while the remaining are being sorted out.