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NHAI formulating policy for early exit of developers

January 2013

The National Highway Authority of India (NHAI) is preparing a new policy that would facilitate and allow the construction companies to exit as soon as the road project is commissioned. The NHAI's move follows highway construction industry's pressing demand to allow them to disinvest from the highway projects when those are commissioned.

The new policy, aimed at allowing exit to developers as soon as the project is commissioned, is presently stuck with the inter-ministerial group consisting of Ministry of Road Transport and Highways, Law Ministry, Finance Ministry and the Planning Commission. Also, the Authority has favoured the demands that the concessionaires having signed contracts before 2009 be allowed complete disinvestment.

The then contracts mandated that the companies maintain 26 per cent equity in the project for the entire concession period. The Planning Commission and the Finance Ministry have, however, objected to the move.

If it goes through the group, it will be required to be approved by the Union Cabinet. Companies with a big portfolio of highway projects are currently looking at selling of them to monetise the value and move on to investment in new projects.