Govt allows transfer of BOT highway projects after two years
27 Aug 2015
The Centre has allowed road developers to completely exit BOT (build-operate-transfer) projects two years after completion and invest the funds in incomplete highway projects, power plants or retire debt.
The Cabinet Committee on Economic Affairs (CCEA) has amended its earlier approval of 13 May 2015 to permit 100 per cent equity divestment two years after completion of construction for all BOT projects, irrespective of year of award.
The CCEA also gave its approval to expand the end-use of the divested equity proceeds of completed road projects.
The approval would allow the concessionaires/promoters to use proceeds from the sale of divested equity in one or more of the following:
- Incomplete National Highway Authority of India projects,
- Any other highway projects,
- Any other power sector projects; and
- Retire their debt to financial institutions in any other infrastructure projects.
This will result in physical completion of languishing infrastructure projects. This in turn will bring relief to citizens / travellers in the concerned area.
The policy shift is intended to expedite award and implementation of highway projects in the country by making additional funds available for investment in projects. This will facilitate increased connectivity across the length and breadth of the country and enhanced economic activity.
This move, which comes three months after the Centre eased exit norms for completed projects, is expected to particularly benefit developers who have multiple verticals in the infrastructure sector.
With the latest decision, highway developers can use the divested equity proceeds in non-NHAI (National Highway Authority of India) projects or in power projects.
Also, the proceeds can be used to reduce their existing corporate debt to financial institutions in any other infrastructure projects. This decision will help unlock equity from completed BOT projects, making it potentially available for investment in all infrastructure projects, and not highway projects alone, said economy watchers.
This will result in physical completion of languishing infrastructure projects, an official release said.
As of May, 80 pre-2009 BOT projects were completed. The equity locked up in these projects worked out to around Rs4,500 crore.
The latest decision is expected to pave the way for more domestic and foreign funds to come into the road sector.
