This Article is From Oct 15, 2015

Government Sops Fail To Revive 5,100 Km Highway Stuck in Limbo

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All India Written by

Government sources say apart from the usual bottlenecks, the main reasons for the projects getting stuck has been malpractices in highway construction projects.

New Delhi: Over half the highways being developed in India under the build-operate-transfer or BOT model are stuck in limbo despite two attempts by the government since May to revive them, officials say.

The total length of the projects stuck is about 5,100 kilometres which amounts to 53 per cent of highways under the BOT scheme where the developer bears the initial investment and transfers ownership to the government once costs are recovered.

Yesterday, the union cabinet offered another concession to road construction companies extending a One-Time Fund Infusion Scheme to the projects over a similar relief announced in May this year exclusively for ailing toll projects.

Even though not even one of the 18 highway builders, whose project is stuck due to want of funds, had opted for the scheme earlier, this time the government hopes it will be different.

The builders said this has been because of the terms and conditions of the one-time fund infusion scheme which includes a loan from the National Highway Authority of India or NHAI at an additional 2 per cent interest over the bank rate.

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The other condition that NHAI will have the first right to proceeds from the projects once they became operational is also unacceptable, they said.

"The government's offer is impractical. We thought one of our project which is 75 per cent complete and requires a Rs 300 crore infusion could benefit from it. But the terms and conditions ruled us out," KK Mohanty of Gammon Infra told NDTV.

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NHAI however defends the lack of response. "Assessing the money requirement for any project is a time consuming process and hence there have been no proposal since May," Chief General Manager - Finance, G Suresh told NDTV.

Government sources say apart from the usual bottlenecks, the main reasons for the projects getting stuck has been malpractices in highway construction projects. After winning competitive bids, many contractors divert funds and machinery to other projects, they said.

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"Most of these are projects awarded prior to 2012. There was poor scrutiny and accountability mechanism was weak. Due to failure to meet deadlines and cost overruns promoters simply stopping construction," a senior official in the Ministry of Road Transport and Highways, who did not wish to be named, said.

Experts say considering relaxed exit clauses and refinancing options could help solve the crisis. "A removal of restrictions on exit clause will also allow developers to sell a stake in completed BOT projects and help raise funds," Sudip Sural, senior director, Crisil Ratings told NDTV.
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