In a big setback to road ministry, the planning commission and finance ministry have stalled the road ministry's proposal, which was aimed at easing the financing woes of road developers. The highways ministry has sought the Cabinet Committee on Investment's (CCI) nod to allow infrastructure developers to sell their entire stake in completed highway project, which will help them to bring in fresh equity into projects that have been under pressure to achieve financial closure.
Currently, road projects allotted after 2009 can offload 74% of their stake only after two years of commercial operations, while projects awarded before that can sell 67% stake three years after commercial operations begin. The ministry also wants to dispose of these lock-in periods.
As per the road ministry, the funding crunch in the sector has dampened progress on new projects and there are about 36 projects facing financial closure issues. The government has set the ambitious 8800 km road project target for this financial year, while, the road ministry has achieved only one-tenth of it. Earlier, the roads ministry has sent multiple suggestions to the finance ministry on ways to ease the fund crunch in the sector.
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