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Government unveils new policy for resolving stalled highway projects

Infra News - Published on Mon, 18 Mar 2019

Image Source: Times of India
Times of India reported that the government has come out with a policy for resolution of “stuck” highway projects including the ones where proceedings have been initiated against the companies before the NCLT. The move is aimed at unlocking huge money of both the lenders and private players including the crisis-hit IL&FS caught in about 28-30 projects as works have come to standstill due to fund crunch.

Sources said that the cumulative cost of the stuck projects could be around INR 30,000 crore. According to a road transport ministry circular issued on March 9, the road owning agencies including NHAI and NHIDCL can foreclose the contract by signing a supplementary agreement. It said the authority would make full and final payment to the private player for the “value of work done” or 90% of the debt due, whichever is lower.

An official said that “The value of work done will be arrived at after a detailed assessment of the progress and the debt due will be as per the contract agreement, which mentions the exact cost of the project. So, there is no question of any company undue benefit, if it has got more loan by inflating the project cost.”

NHAI officials said almost all the stuck projects are the ones that are being implemented on "build, operate and transfer” mode.

The circular also defines the stuck projects that would qualify for such resolution - projects where work has stopped due to inability of the contractor or concessionaire on account of proceedings initiated against them before NCLT under the Insolvency and Bankruptcy Code or default on account of both the client i.e. NHAI, NHIDCL or PWD and the private player.

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Posted By : Rabi Wangkhem on Mon, 18 Mar 2019
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