To study the reasons for the exit of GMR from a National Highways project, a meeting of senior officials, including secretaries and joint secretaries will be convened, Union Minister of State for Road Transport and Highways Sarve Sathyanarayana said in Coimbatore on January 9 . GMR has exited from the Rs 7,500 crore project alleging delay in statutory approvals.
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.
Reiterating their demand on exit norms, highway developers and financial institutions met Highway Ministry officials on February 11. At present, there are limits on the extent to which developers can sell their stake from highway concessions, and how fast they can exit from projects after completing projects.
The Union government may relax exit norms for highway developers, a move which will increase mergers and acquisitions in the road construction sector of India. At present, there are limits on the extent to which a lead project developer can exit from a project, with time-based milestones. Relaxation of this norm has been a long-standing demand of developers and the Cabinet may soon take up a proposal in this regard.
In Pune, the traffic police have made temporary changes in the entry and exit points for vehicles at the Lohegaon airport. The changes have been made to facilitate the airport authority's ongoing work on Airport Road. Vehicles entering the airport complex to drop passengers will now have to enter from gate number one on the northern side of Phase III.
Cash-strapped highway developers may be permitted by the Union government to exit projects at any stage after financial closure if lenders agree to change the concessionaires at the request of the existing developer. The Surface Transport Ministry feels that this could be a shot in the arm for stalled highway projects since equity released from old projects can be used to develop new ones, and companies with relevant expertise can take over the construction or operation and maintenance of the ex
Taking note of difficulties faced by road projects, the Economic Survey has favoured easing of exit routes for highway developers. Exit routes need to be eased so that promoters can sell equity positions after construction, passing on all benefits and responsibilities to entities that step in, says the Survey.
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.