Highway projects worth Rs 1 trillion to move soon: Fernandes

Panel headed by PM's Economic Advisory Council chairman to look into issues on bailout of highway developers

The highways ministry expects projects worth over Rs 1 lakh crore (trillion), which have been stuck for long, to start moving from next month as a concrete decision on the rescheduling of premium paid by developers is expected by the end of this month.

“I am hopeful highway projects worth over Rs 1 trillion would be on stream next month onwards. The report of C Rangarajan Committee on premium rescheduling is likely to be accepted by month-end,” Road Transport and Highways Minister Oscar Fernandes said.

The government has constituted a panel, headed by Prime Minister’s Economic Advisory Council C Rangarajan, to look into the issues pertaining to bailout of highway developers.

The government approved a proposal in October for the postponement of premium payments by highway developers and has referred the matter to the Rangarajan panel.

The move is likely to provide relief to a large number of players such as GMR, GVK and Ashoka Buildcon.

Their projects have been facing delays on account of high premium — the payment made by developers to the National Highways Authority of India under the build, operate and transfer (BOT) mode.

The premium, which is offered by companies during the bidding stage, is based on projected returns from tolls.

Fernandes said this move will pave way for many upcoming infrastructure projects.

The ministry had sent a proposal to the Cabinet seeking its nod for rescheduling premium of about Rs 1 trillion involving 23 BOT (toll) projects.

Meanwhile, sources said one of the proposals made by the Rangarajan panel is that 75 per cent of the premium amount payable to the government will be restructured in the first three years of the contract.

At present, companies pay some premium to the government in the first year of the project which keeps increasing in the subsequent years.

The minister also said the government’s focus will now be on (Engineering, Procurement and Construction) projects, a chunk of which are likely to be awarded this financial year (2013-14).