Faced with a deluge of projects failing to achieve financial closure, the National Highways Authority of India (NHAI) has given a breather to four companies on the verge of losing their contracts. This is probably the first time NHAI has taken such a lenient view, by extending the 300-day deadline for financial closure in a project after it was awarded. According to officials, 45 projects, many awarded on a premium last year, are yet to achieve closure. Half of these are already in the grace period of 120 days.
“One reason for the extension is the highway authority’s admission that it has been unable to do the needful in these cases,” said an official. NHAI is required to facilitate a number of clearances for the projects, which in these cases have been pending.
Four highway projects, two in Kerala and one each in Rajasthan and Odisha, comprising close to 400 km of highways, have been given the extension. Senior government officials said the aim was to get some room for the various sovereign clearances required. They said this was the only hurdle for the concessionaires in getting the financial closure.
| BREATHER FOR FOUR | |||
| Project | Length | Concessionaire | Awarded year |
| 4-laning of Kannur Vengalem Kuttipuram (Package -II) | 81.50 km | KMC Construction Ltd | 2010-11 |
| 4-laning of Kannur Vengalem Kuttipuram (Package -I) | 83.20 km | KMC Construction Ltd | 2011-11 |
| Panikholi- Rimoli | 106.00 km | Gayatri Projects Ltd | 2011-12 |
| Kota - Jhalawar | 88.09 km | Keti Constructions Ltd | 2011-12 |
The extension has been given informally by “NHAI not terminating the contract even after 300 days” though no specific timeframe has been fixed yet for achieving financial closure, the official said.
According to M Murli of the National Highways Builders Federation, it takes 18 to 24 months to get all the clearances for a road project. He said financial closure was getting tougher because lenders had become more cautious and demanded that all clearances be in place. A company gets 180 days to tie up funds for a project. If unable to do so, it gets a grace period of 120 days, with a penalty. If still unable, the project award is cancelled. It is either rebid or awarded to the second lowest bidder.
Earlier this year, NHAI cancelled the award of two projects of about Rs 2,450 crore, awarded last year to DSC Ltd and Gannon-Dunkerley Co. The concessionaires failed to achieve financial closure in the prescribed 300 days.
