Six construction stocks rose 0.96% to 4.15% while five stocks fell 0.31% to 4.36% at 12:41 IST on BSE after CCEA today, 13 May 2015, approved permitting 100% equity divestment after two years of construction completion for all BOT projects.
Ashoka Buildcon (up 4.15%), Valecha Engineering (up 2.33%), NCC (up 1.82%), IRB Infrastructure Developers (up 1.52%), L&T (up 1.04%) and Sadbhav Engineering (up 0.96%) edged higher. Unity Infraprojects (down 0.31%), Patel Engineering (down 0.46%), Hindustan Construction Company (down 1.67%), Gammon Infrastructure Projects (down 2.81%) and Tarmat (down 4.36%) edged lower.
Meanwhile, the S&P BSE Sensex was up 43.08 points or 0.16% at 26,920.56.
In order to provide a renewed thrust to the highway sector and to bring the private sector back on board, the Cabinet Committee on Economic Affairs (CCEA), chaired by the Prime Minister Narendra Modi today, 13 May 2015, approved two major policy initiatives aimed at improving the availability of equity in the market on the one hand, while on the other has authorized the National Highways Authority of India (NHAI) to intervene in languishing projects suffering from lack of funds.
The CCEA approved a comprehensive exit policy framework that now permits concessionaires/developers to divest 100% equity, two years after completion of construction. This would help unlock equity from completed projects making it potentially available for investment into new projects. This decision will also harmonise conditions uniformly across all concessions signed prior to 2009 with the policy framework for post 2009 contracts which permit divestment of equity upto 100 percent, two years after completion of construction, the government statement said.
Further the government statement said that out 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 etc. In conjunction with several other measures being taken to revive such stalled projects, CCEA today, 13 May 2015, approved a special intervention for the projects that are in the advanced stage of completion but are stuck due to either lack of additional equity or lender's inability to disburse further. NHAI has been authorized to provide funds to such projects from within its overall budget/corpus on a loan basis at a pre-determined rate of return. This loan is to be recovered along with interest as the first charge from the toll receipts immediately after completion of construction, the government statement said.
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