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March 2010 - Real Estate & Property. Legal Developments by Seth Dua & Associates.

More articles by this firm.

Norms for highway projects pact changed

The threshold limit in the conflict of interest clause in the model concession agreement for highway projects has been increased from 5 per cent to 25 per cent, thereby allowing any two Special Purpose Vehicles (“SPV”) with a common partner having up to 25 per cent stake to bid for same project.

Certain important and recent legal developments in this area are set out below.

Norms for highway projects pact changed 

The threshold limit in the conflict of interest clause in the model concession agreement for highway projects has been increased from 5 per cent to 25 per cent, thereby allowing any two Special Purpose Vehicles (“SPV”) with a common partner having up to 25 per cent stake to bid for same project. 

Further, the ‘Exit Clause’ has been introduced thereby allowing the lead partner in an SPV to exit by selling its stake after the construction of the project is over. The ‘Termination Clause’ has been removed which allows National Highways Authority of India to take back tolling rights from a concessionaire anytime before the concession period is over, if the concessionaire has recovered its investment on the project and also security money deposited by the bidders will not be forfeited if they are not present at the time of bid opening. 

India Infrastructure Finance Company Limited to raise INR 100 Billion 

GOI has authorized its wholly owned company, India Infrastructure Finance Company Limited (“IIFCL”), to raise INR 100 billion through tax free bonds by March, 2010. GOI has set up IIFCL to finance infrastructure projects in India and the funds can be used to refinance eligible infrastructure projects like port, highways and power projects being developed through Public-Private Partnership (“PPP”) model.

 

Authors:
Sunil Seth (sunil.seth@sethdua.com) and Atul Dua (e-mail: atul.dua@sethdua.com) are Senior Partners with Seth Dua & Associates, Solicitors & Advocates, India .

www.sethdua.com

 

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