NHAI allows premium rejig for 9 highway developers

This will send a positive message and might restart activity in this standstill sector

The National Highways Authority of India, responsible for development, maintenance and management of NHs, today allowed nine of the stressed 23 road projects to reschedule their premium payments, a development that can revive stalled road works and attract investments.

Premium is a payment made by the developer to NHAI in build, operate and transfer (BOT) projects. The premium, which is offered by companies during the bidding stage, is based on projected returns from tolls.

"Nine projects have been approved for premium restructuring by the NHAI Board," an official in the Ministry of Road Transport and Highways told PTI.

"These projects were taken up on a case by case basis and each project's premium payment has been restructured as per the demand," the official, who was part of the meeting, said without divulging further details.

"This will send a positive message to road sector players at large. This might restart activity in this standstill sector and hopefully will be able to attract investments," Vishwas Udgirkar, Senior Director, Deloitte India said.

The Ministry of Road Transport and Highways had sent a Cabinet proposal earlier seeking approval for rescheduling of premiums of 23 stressed projects awarded on BOT, valuing around Rs 1 lakh crore. These projects had been facing delays on account of high premium.

The Cabinet had allowed delayed premium payment after taking into consideration recommendations of a panel, headed by Prime Minister's Economic Advisory Council Chairman C Rangarajan.

Last year, GMR Infrastructure exited the Kishangarh- Udaipur-Ahmedabad project 16 months after securing the order.

It is believed that the company terminated the contract on account of difficulties in taking up the project due to regulatory hurdles, including delays in environment clearance and land acquisition.