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Road contractors may be given more time to get funds

January 2013

In a bid to prevent the exodus of private road contractors from highway projects, the Union government plans to extend the time required for road contractors to achieve financial closure. This is in case there is a delay in getting the required government clearances.

The government's move follows apparently alarmed by the exodus of private road developers from highway projects like that of GMR. In the short run, the National Highways Authority of India (NHAI) plans to extend the time required for developers to achieve financial closure.

In 2011-12 fiscal, about 37 projects were awarded, and 34 are still awaiting financial closure. Usually, project developers get 180 days, extendable by another 200 days, to achieve financial closure, after signing a concession agreement. The Highways Ministry is also considering an option to streamline procedures at a basic level to help prevent projects from getting stuck at various clearance levels.

One option is to try and do away with the need to get approvals for cutting the trees planted on both sides of the road by the Highways Ministry. For widening roads in areas where trees have been planted by the National Highways Authority of India, tree-cutting clearance should not be required, explained a source.

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