Govt relaxes exit norms for road developers

To revive the highways sector and attract developers, the government today approved a proposal for allowing companies to exit projects "harmoniously" without attracting punitive measures.

"The Cabinet Committee on Economic Affairs (CCEA) today approved the proposal to facilitate harmonious substitution of concessionaire in ongoing and completed National Highway Projects," an official statement said.

"This will expedite implementation of road infrastructure in the country and insulate the NHAI from heavy financial claims and unnecessary disputes," it added.

It has been decided that existing concessionaires both in case of completed and on-going projects be permitted to divest their equity in totality, the statement said, adding this would bring about required flexibility for existing concessionaires in terms of exit options.

Subsequent to the substitution, the leading substituting entity shall require to maintain at least 51 per cent equity holding in project special purpose vehicle (SPV), it said.

The proposal aims at revival of the sector by facilitating substitution of concessionaire and "appropriate substitution of the consortium members of concessionaire for project therefore, shall require to be effected by the lenders with the consent of National Highways Authority of India.

The decision follows lack of interest among bidders for highway projects under the public-private-partnership mode and difficulties faced in achieving financial closure for such projects awarded in the recent past already subdued investment climate.

A large number of highways projects are stalled for various clearances including 20 major projects involving investment of Rs 27,000 crore.