Feeling that banks are misguided over lending to road developers, the National Highways Authority of India (NHAI) has asked the banks to hold joint meetings with it before lending to road infrastructure projects. NHAI feels that often lenders are either misguided or spend more than what is required on infrastructure projects.
Road developers who are collecting toll from impending road projects without completing them will be barred to collect such toll by the Union government soon. The government will prevent such road developers from collecting toll if they fail to complete the expansion work within the given period, say media reports.
Due to security concerns and threats from local terrorist groups in the north eastern region of the country, private road developers are not very keen to take up road projects. The Union Road Ministry has made ambitious plans to improve road infrastructure, including an accelerated road development programme in the region.
The Union Finance Ministry’s decision to permit India Infrastructure Finance Corporation (IIFCL) to become the sole lender even at a pre-bid stage has been welcomed by road developers. However, the road developers stated that the exact impact will come to known only after the finer details emerge.
Banks are slow and cautious while lending to road developers whereas the Union government is very keen on expediting road projects on a priority basis to revive growth. In the first half of the current financial year, banks have lent a total of Rs 550 crore to only five road projects.
Road developers in the country will be allowed to charge only 75 per cent toll during the work on six-laning of highway stretches. This was decided by the Union Cabinet last week. To ensure that developers don't delay construction, the Union government also allowed tolling to be suspended for failure to meet the deadline.
The Union government is likely to take a decision on the practice of toll collection by road developers in the country. The Highways Ministry has suggested to the Union Cabinet to end the toll collection by road developers once the road project of the particular developer comes to an end. The idea is to ensure that developers expedite projects' completion rather than delay construction and keep on collecting toll.
Taking note of a three road developers' inability to furnish Performance Bank Guarantee (PBG), the National Highways Authority of India (NHAI) board on August 23 considered termination of the three road projects. NHAI said that the board considered three projects for termination due to the inability of developers to furnish IMG. There were seven more projects, which are not moving, in the list. These projects were left out now, NHAI said.