Construction stocks rise on buzz FM OKs rescheduling premium for roads

Shares of 15 construction firms rose by 0.08% to 8.73% at 14:23 IST on BSE on reports Finance Minister P Chidambaram has approved a proposal to reschedule premium payment for stressed highway projects.

Gammon Infrastructure Projects (up 8.73%), NCC (up 6.12%), Valecha Engineering (up 4.91%), PBA Infrastructure (up 4.80%), C & C Constructions (up 3.23%), Tarmat (up 3.07%), Unity Infraprojects (up 1.85%), Ashoka Buildcon (up 1.40%), IVRCL (up 0.81%), Hindustan Construction Company (up 0.50%), Sadbhav Engineering (up 0.50%), GVK Power & Infrastructure (up 0.45%), Madhucon Projects (up 0.35%), IRB Infrastructure Developers (up 0.18%) and Gammon India (up 0.08%), edged higher.

The S&P BSE Sensex was up 82.50 points, or 0.39% at 21,292.23.

Finance Minister P Chidambaram has reportedly approved a proposal by the Rangarajan panel to permit rescheduling of premium payment for stressed highway projects. This comes nearly a year after the proposal was first discussed.

Premium is the amount offered by a developer to the Government to bag the right to widen a road, maintain it, and collect toll from the road users over a 20-30 year concession period.

According to reports, the approval is effective from today, 5 March 2014, while Highway Ministry and the National Highways Authority of India (NHAI) will take it up on case-to-case basis now.

NHAI Chairman RP Singh was quoted by the media as saying that 21 projects will benefit due to premium rescheduling. He believes that almost all big concessionaries will benefit from the new norms projects including where construction has started. The proposals will be majorly beneficial for 2 to 4 laning expansion. Around Rs 29000 crore premium is involved in 21 projects which are stalled, he added.

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