Recently Ministry of Road Transport and Highways (MoRTH) issued a circular to resolve nearly Rs 30,000 crore of stalled highway projects in the country, including those belonging to companies admitted to National Company Law Tribunal (NCLT), reports Economic Times.
This move is expected to bring in much-needed liquidity into the system by releasing locked-in money of both lenders and private players in about 28-30 projects which are stalled due to the paucity of funds.
As per the 9 March (2019) circular, state-run agencies such as National Highways Authority of India (NHAI) can prematurely close a contract with a private firm by signing a supplementary agreement. The authority will make a full and final payment to the private player for the “value of work done” or 90 per cent of the debt due, whichever is lower.
“Once the private player exits, we can invite bids for completing the project and start work. Similarly, the lenders would get back some portion of the loan, rather than losing the entire amount. In the existing concession agreement there is no provision for any payment, if the contract is terminated before total or provisional completion of the project due to contractor’s default,” said a government official to ET.
Better Stats Than The UPA
It should be noted that road infrastructure development has received a significant boost under the present NDA government. It was reported in October 2018 National Highways totalling 31,000 kilometres were built in the last four years.
This is 26 per cent more than the Congress-led United Progressive Alliance government’s five years total of 24,425 km.
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