Gadkari says will seek nod from FinMin to set up Infra

Union Minister Nitin Gadkari on Monday said Finance Ministry's nod will be sought for setting up an Infrastructure Financial Corporation for lending to road projects awarded through the Hybrid Annuity Model (HAM) in view of cautiousness of national banks in funding them.

A committee will also be set up to resolve the matter and find a way out on how banks can be friendly for infrastructure projects particularly when the sector is moving fast, the Transport and Infrastructure Minister said during the Question Hour in the Upper House.

That apart, the government is trying to get funding from multi-lateral agencies like World Bank for these project, he said, adding that this would require permission from the finance ministry.

The government started awarding road projects as per the HAM after it failed to get response from the public-private partnership (PPP).

Till date, 123 HAM projects have been approved involving a cost of Rs 1.40 lakh crore, while banks have extended support of Rs 47,000 crore, he added.

"There are some problems. I always say there are some people who convert problems into opportunities, there are some who convert opportunities into problems. The problems are there, you are absolutely correct. We will take care of them and resolve them," Gadkari said.

Private banks are funding these projects but not the nationalised banks, he said, taking serious note of a suggestion made by an MP on setting up of a separate infrastructure financial arm of National Highways Authority of India (NHAI) to assist road projects.

"Your suggestion is absolutely correct. Power Corporation has an economic arm called Power Finance Corporation and Railway Corporation has Railways Finance Corporation. Now this is the sector which is contributing 2.5 per cent to the GDP, it is economically viable but banks are not cooperating," he said.

Out of 123 HAM projects awarded, some 121 projects were sanctioned. But the majority of projects are funded by the private banks. Even NBCC is financing, he added.

"The suggestion of making a financial arm to NHAI is absolutely correct. We will take it to the finance ministry and will try my level best to get the approval for that," Gadkari said in the Upper House.

The Minister said that the infrastructure sector is moving fast and the current construction rate is 32 km per day.

The government aims to award road project contracts worth Rs 15 lakh crore during the current term, higher than Rs 11 lakh crore giving during the last five years.

To a query on steps taken to expedite stalled projects, Gadkari said, "Today, we have taken a decision to allow scheduled banks to give bank guarantee for these projects."
He also said, "We will appoint a committee under chairmanship of our secretary. We will discuss the issue with chairman of banks and resolve the issue and find out a way as to how banks can be friendly for infra projects particularly when the sector is moving fast. We will try our level best."
Out of 123 HAM projects awarded so far, 101 projects have achieved financial closure, he said, and added the response from private banks is good. "We are expecting more support from our nationalised banks."
"We are trying for that. One of the infrastructural funds raised by the finance ministry now principally accepted to give Rs 40,000 crore from banks,"