Sops for developers in offing to revive highway sector

December 13, 2013

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Dipak Kumar Dash, TNN |

NEW DELHI: The PM-appointed C Rangarajan committee has recommended a uniform formula of 75% cut in promised annual premium payment for all highway projects for the first three years to revive over three dozen stalled and stressed projects.
The annual premium payment will increase substantially during later part of the contract period so that NHAI does not lose any revenue that developers had quoted while bagging projects. The policy aims to recover the entire premium amount three years before the contract ends. The norm will be same for both six-laning and four-laning of projects. Huge reduction in premium payment in the first three years will come as a big relief to developers since they need more capital investment during construction period. Premium is the annual upfront revenue that developers promise to pay to NHAI, which increases by 5% annually during the contract period.

Rangarajan has sent the proposal to departments including Planning Commission, NHAI, highways and finance ministries for feedback latest by Monday.

The recommendations address concerns of both developers and NHAI. While suggesting that there should be no “penalty” on developers for availing this one time dispensation as it was suggested by the finance minister P Chidambaram, the committee has said that beneficiaries can’t make any claims on NHAI for delay in project take off due to non-fulfillment of condition like statutory clearances. There were fears that developers may submit huge claim on NHAI for rising project cost due to delays attributed to non-availability of land, clearances and shifting of utilities.

Source-http://timesofindia.indiatimes.com