The Cabinet Committee on Economic Affairs, chaired by the Prime Minister of India, has, for the purpose of providing a renewed thrust and impetus to the roads and highways sector and for the purpose of attracting the private sector, approved two major policy initiatives. These policy initiatives are aimed at improving the equity availability in the market and for authorizing the National Highways Authority of India for intervening in projects affected by fund shortages.
Exit policy:
The Cabinet Committee on Economic Affairs has approved a policy framework envisaged to permit concessionaires/ developers to divest up to 100% equity, two years post completion of the construction of the project.
One of the key reasons behind PPP projects not being able to attract bids during the last few years is lack of availability of equity among qualified bidders. This policy providing an exit mechanism is envisaged to unlock equity from completed projects and making it potentially available for investment into new projects.
Fund infusion to salvage languishing projects:
The Cabinet Committee on Economic Affairs has approved a special intervention scheme for projects which are in advanced stage of completion but are stuck due to either lack of additional equity or lender's inability to disburse further funds.
Under the scheme approved, the National Highway Authority of India has been authorized to disburse funds to such projects on a loan basis at a pre-determined rate of return.
Such loan facilities provided to a project under the approved scheme shall be recovered along with interest as the first charge from the toll receipts from the project immediately after completion of construction of the project.
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