Cabinet Approves Project-Exit Policy For Highways Developers

NEW DELHI: The government approved a project-exit policy for highway developers and also authorised the state-run National Highways Authority of India (NHAI) to intervene in languishing projects that are suffering from lack of funds.

The Cabinet Committee on Economic Affairs (CCEA), in a meeting here chaired by Prime Minister Narendra Modi, cleared the two proposals to give a renewed thrust to the highways sector.

According to the CCEA, the comprehensive 'exit policy' framework now permits developers to divest 100 percent equity two years after the completion of construction. 

"It is relevant to note here that during the last few years, PPP projects have not been able to attract bids; one of the primary reasons being lack of availability of equity in the market among qualified bidders," the CCEA said in a statement adding that the move will unlock equity from completed projects that can then be re-invested 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," the statement said. 

The statement pointed out that there are 80 such Build, Operate and Transfer (BOT) projects awarded prior to 2009 that have been completed and the lock-in equity in them works out to be 4,500 crore. 

"Once this (equity) is unlocked and is re-invested in new projects, this could support 1,500 kms of new highways in PPP mode, thus reviving the response to BOT(T) projects," the statement said. 
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