‘Road developers should give entire premium before completion’

December 13, 2013

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One of the proposals is that 75% of the premium amount payable to the govt will restructure in the first 3 years of the contract

Press Trust of India

Road developers should be asked to submit the entire premium amount three years before the completion of full contract, a panel headed by Prime Minister’s Economic Advisory Council Chairman C Rangarajan has recommended.

According to sources, one of the proposals made by the Rangarajan panel is that 75% of the premium amount payable to the government will be restructured in the first three years of the contract.

“The entire premium amount will have to be paid by the highway developer three years prior to the completion of the contract,” sources said.

The Rangarajan panel is likely to submit its report to the Finance Ministry at the earliest.

The sources, however, did not divulge any further information on the submission of the committee’s report.

The panel was tasked with formulating the guidelines and the task of implementation will rest with the NHAI (National Highways Authority of India).

The panel also has representatives from Ministry of Finance, Road Ministry and Planning Commission.

It was constituted after the Cabinet Committee on Economic Affairs cleared the Road Ministry’s proposal for rescheduling the premium of highway projects.

At present, companies pay some amount of premium to the government in the first year of the project which keeps increasing in the subsequent years.

The move was proposed against the backdrop of some private infrastructure firms pulling out of road projects due to delays in regulatory clearances like land acquisition and environment clearances.

Source-http://www.business-standard.com