Waive penalty on road developers hit by Covid-19 lockdowns: NHAI

Wants transport ministry to extend financial closure timeline

The National Highways Authority of India (NHAI) has sought extension of financial closure timeline and waiver of penalty for delay in submission of bank guarantee for road developers impacted by the localised lockdowns during Covid-19. 

NHAI, in a communication to the ministry of road transport and highways, has sought these measures as part of relief under the Atmanirbhar Bharat scheme of the Centre.

According to an NHAI communication to the road ministry, the authority has asked for extension of time for concessionaires for achieving financial closure in the concession agreements concluded between April and June 2021 by 2-4 months, depending on the location. Penalty for delay in submission of performance security or bank guarantee has also been sought for new contracts entered during April 2021-May 2021.

As far as National Highways tolling contracts are concerned, NHAI wants that the reduction in collection of fees be compensated in accordance with the user fee collection contracts.

In case of build-operate-transfer (BOT) and toll-operate-transfer (TOT) contracts, for reduction in collection of user fee, the concession period is proposed to be extended according to provisions in the agreement.

Direct payment to an approved sub-contractor through an escrow account has been proposed besides extension of time to contractors for meeting their obligations.

NHAI has also asked the government to continue releasing the retention money in proportion to the work already executed. It called for no reduction of retention money till September 30, 2021, from the bills raised by the contractor.

For the hybrid-annuity and BOT contracts, performance guarantee has been proposed to be released on a pro-rata basis as provided in the contract. This is if the concessionaire is not in breach of the contract. The second wave hit the country in April and impacted the economy sharply.

In June, the Union Cabinet approved the Rs 6.29 trillion relief package that was announced by finance minister Nirmala Sitharaman to support the pandemic-hit economy.

As part of the package to support the economy, Sitharaman had announced Rs 1.5 trillion of additional credit for small and medium businesses. The FM also provided more funds to the healthcare sector, loans to tourism agencies and guides, and waiver of visa fee for foreign tourists.

Together with the previously announced Rs 93,869-crore for providing free foodgrains to the poor till November and additional Rs 14,775 crore fertiliser subsidy, the stimulus package — which is mostly made up of government guarantees to banks and microfinance institutions for loans they extend to Covid-hit sectors — totalled Rs 6.29 trillion.