Lok Sabha Question No. 1855 (UNSTARRED), answered on 2017-07-27
Subject: Modes of Delivery for Highway Projects
Ministry: ROAD TRANSPORT AND HIGHWAYS
Asked by: S.P. MUDDAHANUMEGOWDA

be pleased to state:

- (a) the total number of road projects have reached the financial closure during the last three years and the current year so far;
- (b) the types of modes of delivery, e.g. Hybrid annuity Model, BOT etc., for implementing the highway projects currently in use;
- (c) whether it is a fact that there are some challenges faced by the Government in such modes and if so, the details thereof; and
- (d) the steps taken/being taken by the Government to meet these challenges?

## ANSWER

## THE MINISTER OF STATE IN THE MINISTRY OF ROAD TRANSPORT AND HIGHWAYS

## (SHRI PON. RADHAKRISHNAN)

(a) to (b) 31 numbers of  road projects have reached the financial closure during the last three years and the current year. The modes  of delivery for implementation of projects are Build Operate Transfer (Toll/Annuity), Hybrid Annuity model (HAM), Engineering Procurement & Construction (EPC) and Item rate.

(c)  to  (d)  Some  of  the  challenges  faced  by  the  Ministry  are  achievement  of  financial  closure  within  time limit,  payment  of  premium  by  concessionaire  construction  completion,  shortage  of  equity  with  private developers, High cost of debt, stake holder demand for exit etc. In this regard, following steps have been taken by the Ministry:

(i) Premium Deferment in stressed projects: Allowing restructuring of premiums committed by Concessionaires  during  the  bid  stage  in  projects  which  is  renegotiable  only  once  through  the  life  of  the Concession.

(ii) Harmonious Substitution in Financially stressed projects: Permitting substitution of existing Concessionaire or the selected bidder /consortium member of such project SPV in a harmonious manner. (iii)  One  time  fund  infusion  to  revive  and  physically  complete  languishing  BOT  projects:  Provision  of financial  assistance  in  the  form  of  a  loan  at  bank  rate  +  2%  subject  to  first  charge  on  the  Toll  /Annuity receivables of those projects which has achieved at least 50% physical completion.

(iv) 100% equity divestment after two years of construction completion for all BOT projects irrespective of year of award which facilitates concessionaires to invest in any other projects.

(v) Authorizing NHAI for rationalized compensation to Concessionaires in case of delays not attributable to Concessionaires for languishing highway projects on BOT mode.

(vi)  Securitization  of  future  cash  flows  in  BOT  Projects:  Granting  of  permission  by  NHAI  to  the Concessionaires of PPP projects which have Toll /Annuity revenue significantly surplus to the repayment obligations to raise subordinate loan on the strength of future surplus cash flows of their operational BOT Road projects

## GOVERNMENT OF INDIA MINISTRY OF ROAD TRANSPORT AND HIGHWAYS

## LOK SABHA UNSTARRED QUESTION NO.1855

ANSWERED ON 27 TH  JULY, 2017

## MODES OF DELIVERY FOR HIGHWAY PROJECTS

## 1855. SHRI S.P.MUDDAHANUME GOWDA:

## Will the Minister of ROAD TRANSPORT AND HIGHWAYS सडक परिवहन औि िाजमार्ग मंत्री