PMO calls meet on relief package for road constructors

The Indian government, seeking to push forward its badly stalled highway construction plans, is today holding a meeting with the road transport ministry and the National Highways Authority of India (NHAI), which is likely to be chaired by Prime Minister Manmohan Singh.

The meeting is expected to discuss the bottlenecks that have led to a slowdown in road projects and the participants may work out an interim relief package for projects that were awarded on premium to make them viable.

National Highways Authority of India (NHAI) is seeking to push a "relief package" for road developers as several of them are "under stress" and are finding it tough to raise debt and equity to finance projects they had bagged by offering to pay a premium.

The NHAI in particular is looking at allowing staggered payment for road-building contracts, which will allow developers to pay a lower upfront premium this year and postpone a part of the amount during the latter part of the contract period.

A large number of projects, awarded at a premium in the last fiscal, may have become unviable for companies due to rising input costs and high cost of borrowings. For such projects, the premium amount may be reduced for the initial few years, providing them some relief. But the total amount of premium, as committed by these projects, will be same, according to reports.

The NHAI awarded a record 6,700 km of road projects in 2011-12 and also awarded a record 31 out of 51 projects at a premium. The highways authority expects to earn around Rs3,000 crore annually through premium payments, which would grow at a rate of 5 per cent per annum.