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Ficci panel urges govt to pay interest of delayed road projects to banks

Many highway projects under the BOT and EPC mode are turning into NPAs due to heavy interest burden on account of delays in projects

Press Trust of India  |  New Delhi 

highways, roads
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In a bid to fast-track highway projects, industry body Monday urged the government to help the Build-Operate-Transfer (BOT) and Engineering, Procurement and Construction (EPC) concessionaires in the road sector by paying directly to banks for the interest accrued on loans by them in the delayed projects.

Many highway projects under the BOT and EPC mode are turning into NPAs due to heavy interest burden on account of delays in projects, Ficci's National Committee on Transport Infrastructure said in a statement.

According to K K Kapila, Co-chairperson Ficci's National Committee on Transport Infrastructure, major BOT and EPC contracts in the country have suffered substantial delays on account of land acquisition, utility clearances and environmental clearances, which are solely attributable to government authority.

"Extension of time is being granted, but the interest accrued on the loans given by the banks, for such delayed period, has resulted in the bank accounts of the concessionaires and EPC contractors becoming NPAs," Kapila said adding that "as a result, the banks are unable to further service funds to such projects inordinately delaying their completion."

There have been cases when such contractors had abandoned such projects due to cost and time overrun.

"We urge the government that in such delayed BOT projects, EPC contracts, where delays are not attributable to the concessionaires and EPC contractors, the interest during such extended period could be directly given to the banks, This would then prevent the accounts of concessionaires and EPC contractors from becoming NPA," Kapila added.

He said this will also help in opening a window for further funding of the projects leading to their completion.

First Published: Mon, July 15 2019. 15:05 IST
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