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The National Highways Authority of India (NHAI) is likely to reject requests from four or five firms, including Sadbhav Engin-eering, Reliance Infra- structure and Oriental Structural Engineers, for rescheduling the premia due to the government for constructing highways.
"We will take nine applications for consideration in our board meeting tomorrow out of a total of 15 received for rescheduling of premium," a senior official told Business Standard, on condition of anonymity. However, four to five applications do not qualify for the scheme this year and are likely to be rejected. "There has to be a strong case for rescheduling premia. We did not find these developers under stress for the projects they have applied for rescheduling. They don't need any relief this year; they might need it in the coming years, but not now," the official added.
A total of 39 projects are eligible for rescheduling premia. The combined premium these developers owe the government is Rs 25,000 crore, through the next 20 years.
The NHAI received premium rescheduling requests from Indore Dewas Tollways, a consortium of DLF Infra and Gayatri Projects, IRB Infra for two projects, Reliance Infra for three, and Essel, Larsen & Toubro and Srei Infrastructure for one each. Besides, Sadbhav Engineering and Oriental Structural Engineers, Sew-Navayuga Engineering, Transstroy India, BSCPL Infrastructure also applied under the scheme.
In March this year, a panel headed by C Rangarajan, chairman of the Prime Minister's Economic Advisory Council, had suggested a policy to allow cash-starved road developers to reschedule their premia. The government had approved it before the model code of conduct for the elections came into force.
Premia are to be rescheduled when developers are unable to service their debt, operating expenditure and premium payment. If the projected toll revenue falls short of the cost-plus premium, the government will consider the deferred amount as a loan to the developer. But it is expected to charge annual interest of 10.75-11 per cent.
During 2010-2012, developers had bid aggressively, when the government had awarded a record 147 road projects, worth Rs 1.47 lakh crore. At that time, India's economic growth was much higher; inflationary costs have climbed since then.
Road projects worth Rs 83,000 crore are pending completion. Since 2009, the United Progressive Alliance government has recorded the completion of only three projects, adding just 315 km to the existing highways' network.
Under the policy notified on March 4 this year, road developers availing of the rescheduling package are not be allowed to pay dividend to their parent company until they clear all dues to the NHAI. The government will allow the developer to pay 25 per cent of its dues to the NHAI during the first three years; thereafter, the amount will be raised to 50 per cent. The developer will have to pay the remaining through the following years and the amount carried forward will attract interest of 10.75 per cent.
Premium is the amount developers have to pay the NHAI for a build-operate-transfer project on the assumption that the returns from the project will be high. The amount is decided at the time of bidding on the basis of a projected future traffic flow. Typically, the term for payment of the premium is 20-25 years and the amount payable by developers ranges from Rs 3 crore to Rs 680 crore a year, which rises five per cent a year. Various companies owe the NHAI premium worth Rs 151,000 crore, through the next 20-25 years.
ROAD TO NOWHERE
* Of the 39 eligible, NHAI has received 15 applications for rescheduling of premium
* These developers owe about Rs 25,000 crore of premium to NHAI
* On Friday, NHAI board will decide on premium rescheduling applications
* Govt had notified the policy to bail out the stressed road developers on March 4
* Premium to be rescheduled if developers can't service debt, operating costs & premium payment
* If projected toll revenue falls short of the cost-plus premium, govt will consider deferred amount as a loan to the developer and charge interest of 10.75-11%
