In a big relief to the highway developers, the Ministry of Road Transport and Highways is preparing a proposal which will help them to exit projects without punitive measures, as Under a clause of Substitution (Agreement) in the Model Concessionaire Agreement, the lenders of the project will be the one to decide the exit of the developer and can choose the new firm as developer.
Substitution agreement is between the National Highway Authority of India (NHAI), which is responsible for the development, maintenance and management of National Highways entrusted to it, lenders and the Concessionaire (developer). As per the provisions of the agreement, NHAI and the Concessionaire will have the right for the substitution of the Concessionaire in accordance with the provisions of the agreement.
However, this proposal will go to the Cabinet Committee on Economic Affairs for final approval, once all the ministries send their comments. Earlier there was proposal to allow developers to fully exit the projects or partially divest equity in the road project with the approval from the stakeholders.
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