Most of BOT highway projects still in default

The government is set to give a renewed push to the pure-play build operate transfer (BOT) projects in the highway sector by tendering out a clutch of projects and sweetening the model concession agreement, but the bulk of old BOT projects that went into default over the last decade are yet to find resolution.

According to an Icra study of 120 BOT road projects which started defaulting between FY11 and FY22, only a fourth have come out of default. “The total debt outstanding for the 120 stressed assets stood at Rs 62,000 crore. One-fourth of road projects have come out of default through various routes viz. stake sale and substitution wherein strong sponsor groups/ investors (private equity funds) have taken over the stressed assets, improved cash flow position, and restructuring. Through this, Rs. 20,000 crore of debt has been regularised. However, balance Rs 42,000 crore of debt is still in default or is awaiting settlement in terminated projects,” Rajeshwar Burla, Group Head, Corporate Ratings, wrote.