The Union Cabinet is soon to discuss the proposal for exit clause for highway developers. If the proposal is cleared, road contractors can exit from a road project by bringing in a new developer after the financial closure is complete. The exit clause proposal can only be triggered by the contractor who plans to exit, and cannot be moved without the consent of the bank, which has funded the project.
The clause will be applicable to all existing projects and will also be introduced in the model concession agreement for projects to be awarded in the future.
Sources in the Union Road Transport Ministry said that all the government wings, which were earlier not in favour of the proposal, have given a go ahead to the proposal and the Ministry is expecting clearance for the proposal in the Cabinet meeting on June 21, the ministry sources added.
The finance ministry did not favour the exit clause earlier on the grounds that there will be an issue of accountability in case of a defect in the road, which have been addressed now.
The Cabinet had then formed a committee of the finance minister, roads and highways ministry and deputy chairman of the Planning Commission to discuss the exit clause proposal. This clause will allow highway developers wishing to exit from projects and bid for other projects. In a public-private partnership project, a road contractor has to be associated with the project for the full duration of the concession period, which ranges from 25 to 30 years.