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Govt paves way for stalled road projects; revives response to BOT

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New Delhi :  In a major respite to the highway developers, the Cabinet Committee on Economic Affairs allowed developers to exit road projects two years after they are completed, a move that will help in unlocking investments to the tune of Rs 4,500 crore.

The Cabinet panel also approved a policy for the National Highways Authority of India to provide one-time loan assistance for projects stuck at advanced stages due to either a paucity of funds at the end of the developer, or the inability of the lender to disburse further.

The decision by the Cabinet Committee on Economic Affairs (CCEA) will help in unlocking these investments that can be re-invested to lay down 1,500 kms of new highways on PPP mode, thus reviving the private sector’s response to Build, Operate and Transfer (BOT) projects.


Besides, the special intervention on projects that are at advanced stages of completion but are stuck due to lack of additional equity or lender’s inability to disburse further can help revive about 16 road projects languishing in various parts of the country.

“The CCEA has approved two major policy initiatives aimed at improving the availability of equity in the market on the one hand, while on the other has authorised NHAI to intervene in languishing projects suffering from lack of funds,” said an official statement.

The CCEA has also approved a comprehensive Exit Policy framework that permits concessionaires or developers to divest 100 per cent equity two years after completion of construction, it added.

In the last few years, public-private partnership (PPP) projects have not been able to attract bids and one of main reasons behind this is the lack of availability of equity in the market among qualified bidders.

The government decision will help in unlocking equity from completed projects making it potentially available for investment into new projects, the statement said.

There are 80 BOT projects awarded before 2009 completed and the locked-in equity in these projects works out to be around Rs 4,500 crore.

Once this amount is unlocked and re-invested in new projects, it could support 1500 kms of new highways on PPP mode, reviving the response to BOT projects.

BOT is an arrangement in which a private company builds an infrastructure project, operates it and then transfers the ownership to the government.

Of the ongoing 240 PPP projects, some are languishing due to delays on account of land acquisition, grant of statutory clearances, local issues and shortage of construction materials.

According to government data, as many as 437 road projects have been running behind schedule, while 101 are under disputes and 57 got terminated over the last three years.

The government had set a target of constructing 6,300 kms of roads in 2013-14 and 2014-15 each, of which 4,260 kms and 4,410 kms, respectively, were achieved during the two fiscals, Minister of State for Road Transport and Highways P Radhakrishnan told Rajya Sabha earlier this week.