Earlier, many developers including GMR, GVK and Ashoka Buildcon had cited pending Environmental Clearances as a key stumbling block for backing out of projects.

But, in the last six months, with Environment Clearances coming through with the intervention of Cabinet Committee on Investment (CCI) for these highway projects the developers are left with no excuses for not making investments.

In fact, GMR and GVK are already in Court to prevent National Highway Authority of India (NHAI) from encashing their bank guarantee for not executing the project.

NHAI had earlier taken a stance that developers were using pending regulatory clearances as a veil to not do those projects that have become unviable.

NHAI VINDICATED

In mid-January, when GMR and GVK had issued termination notices, NHAI Chairman RP Singh had stated, “Basically, in our view, as to why they are walking out of these two projects is the change in economic scenario and escalation of cost and not delays in environment clearance.”

Singh had added that these firms are exiting because the projects have turned unviable. He had also said that NHAI “sympathises” with the two major players but was not ready to accept the reasons for termination of contracts.

“Unfortunately, the escalation is becoming too high because in the last few years, the rates of aggregates have gone up high,” Singh had said then.

PREMIUM REJIG

Now, the developers are waiting for the Government to take a decision on allowing postponing of premium payment.

Premium is the amount offered by a highway developer to the NHAI for the right to develop and operate a highway for 20-30 years. Premium, which is payable every year, is arrived through a competitive bidding process.

With the slowdown setting in, many highway developers who had won projects two-three years ago promising high premium, are now unable and unwilling to implement them. To continue building the highway, they want to postpone their premium payments in a manner that the net present value of the premium is not changed.

Road Ministry has referred the matter to Finance Ministry for a decision. Earlier, the Law Ministry had shot down the proposal to permit rescheduling.

On the GMR case, taking note of the fact that a settlement is being worked out, the Delhi High Court has given an interim order stating that the bank guarantee will be alive till November 6. The interim order will be subject to the bank guarantee being kept alive.

 Source-http://www.thehindubusinessline.com