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Business News/ Industry / Infrastructure/  Nitin Gadkari gives deadline for stalled road projects
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Nitin Gadkari gives deadline for stalled road projects

If stalemate continues beyond 31 January, government will step in to look for out of the box solutions, says highways minister

Issues pertaining to half a dozen projects have already been resolved, said road transport and highways minister Nitin Gadkari.Premium
Issues pertaining to half a dozen projects have already been resolved, said road transport and highways minister Nitin Gadkari.

New Delhi: Road transport and highways minister Nitin Gadkari and finance minister Arun Jaitley convened a meeting on Thursday with leading banks, financial institutions and highway concessionaires to find a solution to 19 stuck national highway projects worth 40,000 crore.

Officials present at the meeting said that banks and concessionaires highlighted the problems faced by them, with Gadkari assuring them that his ministry will try its best to resolve the problems at the earliest, even as he urged banks to continue lending to the sector.

However, senior officials in the highways ministry were sceptical about a quick solution.

If the stalemate continues, the prime minister’s office and the finance ministry will step in to look for “out-of-the-box" solutions, said Gadkari, adding that if his ministry is unable to solve the issues, it will “recommend to the cabinet that a committee is needed under the finance minister, comprising finance secretary and highways secretary for out-of-the-box decisions".

On a positive note, he said that issues pertaining to half-a-dozen projects have already been resolved.

The government has decided that “under no circumstances will any project be pending till January 31", Gadkari said, warning that his government has already terminated 41 project contracts on account of delays.

A senior official from the highways ministry said projects that are stuck or languishing are the ones where the contract was given over four-five years ago but work on it has not started yet. Some of the projects have been allotted to companies like Larsen & Toubro Ltd, Gammon India Ltd, Hindustan Construction Company Ltd (HCC), Madhucon Projects Ltd and Essel Infraprojects Ltd.

Last month, outgoing highways secretary Vijay Chhibber had taken a strong view on stalled projects. He said “the concessionaires and bankers are not realizing that we are reaching a stage of impatience, and people who are users of these roads are not going to be waiting anymore".

He issued a warning: “If developers and bankers fail to mend their ways and initiate correctives to roll out projects by January-end, the government will start terminating contracts in PPP (public-private partnership) mode and repackage them."

Financial institutions that attended the meeting included State Bank of India, Punjab National Bank, UCO Bank and Bank of India. They sought the application of the 5/25 scheme for infra projects of less than 500 crore. The scheme, announced by Jaitley in 2014, allows banks to extend the repayment periods up to 25 years, with an option of refinancing the loan every five years. After this period, the borrower pays back the loan through takeout financing provided by other banks.

The banks also raised the issue of overruns in project costs as approved by the National Highways Authority of India (NHAI). They sought clear guidelines on the extent of overruns that would be permitted.

Another issue raised was the need to have the option of premium deferment in the case of cost overruns to ensure the viability of projects.

Gadkari said average road construction has gone up from 2km a day to 18km a day and the NDA government aims to achieve the target of 30km a day by March. This year, the ministry has already allocated work for 6,000km and is expected to achieve its target of 10,000km by the end of the fiscal.

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Published: 29 Jan 2016, 12:47 AM IST
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