In an attempt to make road developers’ journey less bumpy, the road ministry is set to modify its exit policy and make it easier for new investors to enter and replace existing ones. This move would allow road-developers to free up capital, ramp up execution of delayed projects and would unlock bad loans owed by financial institutions.
This development comes on the heels of a letter written by R.P. Singh, chairman, National Highways Authority of India (NHAI) to Vijay Chhibber, secretary, ministry of road transport and highways, in August 2013, seeking a review of the policy which he called "sub-optimal".
Accordingly, the ministry has relaxed the policy, it formed last year and allowed concessionaires to divest their stake in the road projects without necessarily forming new special purpose vehicles (SPVs). Earlier policy too allowed promoters to exit, provided all the promoters agreed to offload their stakes and form a fresh SPV with a new composition of promoters.
Removing the requirement of forming a new SPV would ensure that lenders of the project will not have to carry out fresh due diligence and that the project will not need fresh clearances like environment and forest clearances.
Further towards this development, Finance ministry to has given a ‘go-ahead’ in the exit policy, and the ministry would soon be notifying these after internal approvals.
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