Maharashtra-based IRB Infrastructure has been the first to receive the Road Ministry´s recent arbitration reform to revive the construction business. According to the National Highways Authority of India (NHAI) website, an amount of Rs 21.17 crore and Rs 248.50 crore has been sanctioned for IRB Ahmedabad Vadodara Super Express Tollway and IRB Goa Tollway, respectively. What´s more, reports indicate that of the total claims made by various players, IRB is the first company to have received the amount from NHAI.
Commenting on the amount received, Sudhir Hoshing, Joint Managing Director, IRB, says, ´Both projects had started arbitration around 12 to 18 months ago. In no time, the arbitration reform was introduced - to the benefit of all concessionaires. While some companies are still trying to put their bank guarantees in place, we could do it at a faster pace, and hence have got the money on time.´
Towards the end of 2016, reports indicated NHAI´s plans to release Rs 6,000 crore to developers stuck in litigation. In a new policy, the government asked its departments and ministries along with public-sector entities to release 75 per cent of the disputed amount where the developer or concessionaire had won an arbitration case. However, of the several claims that have come in, some have been turned down as well, as the claim amount stands deposited with the Supreme Court, and hence is not eligible for the scheme. Hoshing points out the basis of award as, ´NHAI will accept the claims provided the concessionaire has won the arbitration award and NHAI should have challenged the same in court.´
A cash-flow benefit has been evident. Further, this step could result in reducing bank stress and providing capital to restart infrastructure investment. And, as Hoshing points out, ´Seventy-five per cent of the money that is expected to come in after three to four years comes in now.´ However, while this could bring instant relief to all concessionaires, the nature of claims would differ and their success would vary from a case-to-case basis.
- SHRIYAL SETHUMADHAVAN