 "Arun Jaitley")
Finance Minister Arun Jaitley on Thursday stressed the need to increase the pace of work in the highways sector, while highways minister Nitin Gadkari said the government would soon resolve the issues pertaining to all stalled projects.
Nineteen road projects with a total project cost of Rs 40,000 crore remain stalled owing to various reasons including lack of equity, paucity of funds and cost escalation with bankers reluctant to fund the projects further.
“Earlier, we were confident that the issues pertaining to all 19 stalled projects would be resolved by January 31. But, looking at the current scenario, it seems to be difficult. Out of the total, the issues related to five to six projects have almost been resolved; the remaining would take some time,” Gadkari told reporters on the sidelines of his meeting with Jaitley, concessionaires and bankers, and other stakeholders involved in the national highways programme.
He added something concrete would come out in the meeting; otherwise, a committee would be formed comprising the Prime Minister’s Office, finance secretary and roads secretary to expedite the stalled projects.
Five to six projects, where half the construction work is complete, would get a one-time fund infusion by the National Highways Authority of India (NHAI), Gadkari said.
The Cabinet had last year approved the one-time fund infusion scheme. While NHAI wanted to have the first right on stuck highway projects, bankers with high exposure to the sector were not comfortable with it as they wanted their to protect their interest. To resolve the issue, the ministry sought a one-time special dispensation from the Reserve Bank of India (RBI) so that projects for which one-time fund infusion is required, are exempt from asset classification and provisioning norms.
Jaitley noted the road sector was paralysed when Gadkari took charge as minister, but things improved under him.
“You didn't have a single contractor responding to the tender. Roads contractors were not even able to pay bank interest. The government has now brought in structural changes. The banking sector has also started supporting highway projects.”
According to Jaitley, all major contracts now attract multiple bidding. The government has induced a lot of liquidity in the sector and the banks have started supporting the sector. A number of contractors have started repaying old debts. “There are a large number of contractors wanting to execute the projects. All procedures have been simplified. There is an exit policy, there is a hybrid model and so on. Various options of flexibility are there in the sector. The result of this is that today, we have already awarded 6,800 km of highway projects. By March, this figure will go up to 10,000 km.”
Nineteen road projects with a total project cost of Rs 40,000 crore remain stalled owing to various reasons including lack of equity, paucity of funds and cost escalation with bankers reluctant to fund the projects further.
“Earlier, we were confident that the issues pertaining to all 19 stalled projects would be resolved by January 31. But, looking at the current scenario, it seems to be difficult. Out of the total, the issues related to five to six projects have almost been resolved; the remaining would take some time,” Gadkari told reporters on the sidelines of his meeting with Jaitley, concessionaires and bankers, and other stakeholders involved in the national highways programme.
He added something concrete would come out in the meeting; otherwise, a committee would be formed comprising the Prime Minister’s Office, finance secretary and roads secretary to expedite the stalled projects.
Five to six projects, where half the construction work is complete, would get a one-time fund infusion by the National Highways Authority of India (NHAI), Gadkari said.
The Cabinet had last year approved the one-time fund infusion scheme. While NHAI wanted to have the first right on stuck highway projects, bankers with high exposure to the sector were not comfortable with it as they wanted their to protect their interest. To resolve the issue, the ministry sought a one-time special dispensation from the Reserve Bank of India (RBI) so that projects for which one-time fund infusion is required, are exempt from asset classification and provisioning norms.
Jaitley noted the road sector was paralysed when Gadkari took charge as minister, but things improved under him.
“You didn't have a single contractor responding to the tender. Roads contractors were not even able to pay bank interest. The government has now brought in structural changes. The banking sector has also started supporting highway projects.”
According to Jaitley, all major contracts now attract multiple bidding. The government has induced a lot of liquidity in the sector and the banks have started supporting the sector. A number of contractors have started repaying old debts. “There are a large number of contractors wanting to execute the projects. All procedures have been simplified. There is an exit policy, there is a hybrid model and so on. Various options of flexibility are there in the sector. The result of this is that today, we have already awarded 6,800 km of highway projects. By March, this figure will go up to 10,000 km.”
