Highways, power projects exit-clause amended

The government on Wednesday amended the project-exit clause pertaining to road and power sectors, thereby providing an easier and faster option of divestment to the debt-ridden developers.

The Cabinet Committee on Economic Affairs (CCEA), at a meeting here chaired by Prime Minister Narendra Modi, cleared the amendment to the earlier clause which allowed for exit from a build operate transfer (BOT) projects two years after the completion of construction.

The new amendment allows for divestment by developers irrespective of the year, when the project was awarded.

According to the CCEA, the facility will be provided to developers of National Highway Authority of India (NHAI) projects, any other highway development work or power sector programs to retire their debt to financial institutions.

"This (decision) will result in physical completion of languishing infrastructure projects. This in turn will bring relief to citisens in the concerned areas," the CCEA was quoted in a statement.

"The main object of the approval is to expedite award and implementation of highway projects in the country by making additional funds available for investment in projects."

CCEA pointed-out that most developers in the infrastructure sector are carrying highly leveraged balance sheets at their holding companies level, as they have been simultaneously supporting various infrastructure special purpose vehicles (SPVs) which are under severe stress.

"These developers can be allowed to utilise funds to reduce their existing corporate debt or for investment in any new infrastructure project that need not alone be highways projects, as most developers have multiple verticals in the infrastructure sector," the statement added.