"It is just a matter of procedure. The decision will come soon as everybody, including the NHAI (National Highways Authority of India), is in favour of it," IVRCL chairman and managing director, E Sudhir Reddy, told Business Standard. At present, the Centre allows only 74 per cent stake sale in BOT projects.
Reddy said IVRCL would expedite the process of selling more projects after Centre's decision in this regard.
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The Hyderabad-based company recently sold three BOT projects - Salem Tollway, Kumarapalayam Tollway and IVRCL Chengapally Tollway - to the Tata group firm TRIL Roads Private Limited.
The stake sale is yet to be approved by the NHAI and institutional lenders. The projects have been reportedly executed at a cost of Rs 2,200 crore and nearly two-thirds of this money had been lent by banks.
Reddy, however, said banks approving the stake sale should not be a problem as the projects were sold to a Tata group company, which has a good standing among the financial institutions.
Last month, industry sources said, some of the operators of BOT projects hailing from Andhra Pradesh met the Prime Minister and apprised him of their problems.
More than the high interest rates, they were said to have told the Prime Minister that the rising cost of construction material due to sudden policy changes by state government was making development of BOT projects unviable.
For instance, Reddy said, IVRCL was now securing sand from Jharkhand to execute a BOT project in Bihar as the Bihar government had banned sand mining in the state. There was also cost escalation on account of state governments delaying in execution of state-support agreement. These along with other factors were resulting in project costs spiralling by almost 15-20 per cent over the original estimates.
Besides, the developers had tendered for BOT projects assuming the GDP growth rate would be in double digits. With no such thing happening, only 5 per cent of the BOT projects in the country was now stated to be profitable.