Lenders may get dues from NHAI

NEW DELHI: The government has sought to address a key irritant for banks and financial institutions that was making them averse to lending to highway projects.
After much prodding by the finance and road transport ministries, the National Highways Authority of India (NHAI) has decided to release 90% of the debt due where the contracts are terminated due to default by contractors. In case of NHAI’s fault, the highways authority will release 100% of the outstanding debt and the equity of the highway builders, an internal circular issued earlier this month said.
Payment has been released in around half-a-dozen cases being executed on build-operate-transfer (BOT) mode, government sources said, although several lenders are awaiting the clearance of what they believe is their rightful due that has been blocked by NHAI. This had prompted them to take up the issue with the finance ministry, citing court pronouncements in the matter, although NHAI has not awarded any BOT in the last four years.
The latest norms for “calculation of the termination payments” for BOT projects have brought greater clarity and will speed up the release of termination payment, said sources.