MoRTH to establish credit rating metric for private construction firms
ROADS & HIGHWAYS

MoRTH to establish credit rating metric for private construction firms

Companies that build infrastructure must have a credit rating of "BBB" or above to be eligible to submit a proposal for national highway projects funded by public-private partnerships (PPPs).

Any bidder who wishes to make a bid for the project but does not have such a credit rating must include a "letter of comfort" from their bank or other financial institution.

The Union Road Transport and Highways Ministry has never previously established such a credit rating criterion for private construction companies.

The decision was made in response to concerns that contractors who were awarded projects under the Build Operate and Transfer (BOT-Toll) and Hybrid Annuity Model (HAM) were having trouble securing funding to begin construction, which delayed the project's implementation.

The investment grade rating of "BBB" means that there is little chance of default and that the ability to meet financial obligations is deemed sufficient. However, this capability is more likely to be hampered by unfavourable commercial or economic situations.

Due to financial difficulties faced by several highway builders, some projects have been postponed. The Highways Ministry recently stated in response to a parliamentary query that at least 10 projects were delayed owing to issues with contractors, six of which were related to contractors' financial difficulties.

Also read:
Rs 4.88 billion order bagged by NBCC from MHA to build border road


Companies that build infrastructure must have a credit rating of BBB or above to be eligible to submit a proposal for national highway projects funded by public-private partnerships (PPPs). Any bidder who wishes to make a bid for the project but does not have such a credit rating must include a letter of comfort from their bank or other financial institution. The Union Road Transport and Highways Ministry has never previously established such a credit rating criterion for private construction companies. The decision was made in response to concerns that contractors who were awarded projects under the Build Operate and Transfer (BOT-Toll) and Hybrid Annuity Model (HAM) were having trouble securing funding to begin construction, which delayed the project's implementation. The investment grade rating of BBB means that there is little chance of default and that the ability to meet financial obligations is deemed sufficient. However, this capability is more likely to be hampered by unfavourable commercial or economic situations. Due to financial difficulties faced by several highway builders, some projects have been postponed. The Highways Ministry recently stated in response to a parliamentary query that at least 10 projects were delayed owing to issues with contractors, six of which were related to contractors' financial difficulties. Also read: Rs 4.88 billion order bagged by NBCC from MHA to build border road

Next Story
Technology

We’re building robots that flow, not just move

Founded in 2021, Flo Mobility is reimagining construction automation with vision-AI robots designed for seamless movement through complex sites. In conversation with CW, Manesh Jain, Founder & CEO, discusses the company’s origin, its LiDAR-free tech stack, and expansion plans in the Middle East and US.What inspired the name Flo Mobility? Why ‘Flo’ and not ‘Flow’?When we started the company in 2021, our focus was on building autonomous navigation systems for robots. Since our work centred around robot movement, ‘mobility’ naturally became part of the name. We wanted to co..

Next Story
Real Estate

We’re committed to setting benchmarks in sustainable luxury living

From a landmark land acquisition in Boisar to ambitious launches across the Mumbai Metropolitan Region (MMR), National Capital Region (NCR), Bengaluru and Pune, Birla Estates is driving future-ready growth with a strong focus on sustainability, partnerships and premium living, firmly anchored in its LifeDesigned® philosophy. K T Jithendran, Managing Director & CEO, outlines the company’s premium, sustainable growth playbook in conversation with PRATAP PADODE, Editor-in-Chief, CW. Excerpts:Birla Estates recently acquired a 70.92-acre land parcel in Boisar, Maharashtra, for..

Next Story
Infrastructure Urban

Mumbai’s land crunch and ageing homes call for structured renewal

Founded in 2022, Etonhurst Capital Partners is a real-estate fund management platform focused on the Indian market. As the firm achieves the first close of Rs 1.8 billion for its debut Rs 5 billion fund, Bamasish Paul, Co-founder, Managing Partner & CEO, discusses its sharp focus on redevelopment-driven value creation in Mumbai’s urban core with CW. Excerpts:Etonhurst Capital has achieved a significant milestone with the first close of Rs 1.8 billion for its Rs 5 billion fund. What factors contributed to this early success and how do you plan to attract further investments to r..

Advertisement

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Advertisement

Talk to us?