In a bid to revive road construction, the government today approved one-time financial assistance for languishing national highway (NH) projects.
"The Cabinet Committee on Economic Affairs (CCEA) today approved a one time fund infusion to revive and physically complete languishing NH projects," Communications and IT Minister Ravi Shankar Prasad said after the Cabinet meeting.
CCEA, chaired by Prime Minister Narendra Modi, gave its approval for fund infusion to revive and complete languishing NH projects under the extension of provision available for BOT build-operate-transfer (Toll) projects to BOT (annuity) projects, an official statement said.
The decision will allow provisions of the Policy Circular of NHAI issued in June this year on one-time fund infusion for BOT (Toll) projects to be extended and made applicable in case of languishing projects on BOT (Annuity) mode, it added.
This is subject to the condition that after completion of the project, loans are to be recovered along with interest at Bank Rate plus 2 per cent by NHAI from annuities payable, bi-annually, through execution of tripartite agreement among the senior lender, concessionaire and the Authority, it said.
This infusion of fund will be for all such projects that have been languishing as on November 1, 2014. All such cases and the amount of bridge fund required in each case shall be approved by the Authority, on a case to case basis, the statement said.
"This decision will revive highway projects in the country. It will also facilitate uplifting the socio-economic condition of the entire nation due to increased connectivity across the length and breadth of the country, leading to enhanced economic activity," it added.
By adopting this policy, all major stakeholders in the PPP arrangement - the Authority, lender and the developer, concessionaire would have an increased comfort level resulting in revival of the sector, it said.
The highways sector is struggling to roll out stuck projects worth Rs 3.8 lakh crore but the developers in many cases are now shying away.
Road Transport and Highways Secretary Vijay Chhibber said last week that banks who were "happily over-financing" road projects without necessary due-diligence are also to be blamed for this problem and there are nearly 70 projects that have got funding at escalated costs.
After steel sector, roads account for the second largest amount of bad loans for the banking sector.
Chhibber had said the problem compounded as banks gave large upfront amount to developers who used the money in other sectors without worrying about delays in the road projects.
A recent Crisil study showed that nearly half of the road projects being constructed under the build, operate and transfer model with a sanctioned debt of Rs 45,900 crore are at a high risk of not being completed.