Payment delays by the government are a major cause of concern for infrastructure companies, said Ajit Gulabchand, Chairman and Managing Director, Hindustan Construction Company (HCC).

The government owes approximately ₹10,000 crore to HCC, of which ₹2,500 crore has already come in favour of the company through arbitration, sources said.

Asked if the exit route offered to contractors would help road projects, Gulabchand said it was “an inadequate measure” and put high emphasis on timely payments.

“The government must learn to honour its contract. Payments are always the issue. Some decisions are delayed and changes are made and that involves some (extra) costs,” he told BusinessLine in an interview.

Exit clause The government recently allowed infrastructure companies to exit concession projects — build, operate and transfer (BOT) and annuity-based ones — two years after project completion. The move is expected to unlock investments of at least ₹4,500 crore.

Gulabchand, however, has a different take. “Why must you insist that a developer be married to a project at all? I feel that if I cannot complete the project, I sell it to someone else,” he said.

Calling for policies to allow the “anytime” sale of projects, he said: “The concession agreement has the construction risk, the initial traffic risk and subsequently, the normal traffic risk. The moment you de-risk the construction, the project value goes up. There would be buyers of a different kind.”

Amendments in arbitration Gulabchand was also critical of the inadequacy of the dispute settlement mechanism that invites court intervention and takes years to complete.

“How many times, in how many areas, will you go to court? Why are courts becoming such an important area to resolve these issues?” he questioned.

The answer, he felt, may come with the proposed amendments in the Arbitration (and Conciliation) Act. “They are amending it so that you cannot easily challenge it. Arbitration must be done within a period and so are positives,” he added.

The infrastructure sector, he said, is suffering from legacy issues. Claiming that there was a “bad period” of project governance, the CMD expressed hope that a change would come with the Narendra Modi government working on the “ease of doing business”.

“They (Modi government) are trying to do this (ease of doing business). They are taking a little bit longer, and therefore, impatience is increasing. But they are in the process,” he added.

With fiscal deficit under control and subsidy burden going down, there is now money with the government.

This in turn, Gulabchand hopes, may lead to larger spend on infrastructure.

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