The National Highways Authority of India (NHAI) on Friday approved deferment of premiums for nine projects worth ₹5,960 crore, spread over the next 12 years.
Companies such as BSCPL, L&T, IRB Infrastructure, Gayatri-DLF and Reliance Infrastructure will now together be able to postpone payment of ₹651 crore in premiums to NHAI in 2013-14.
UPA decisionThis deferment is based on a policy finalised by the UPA Government, days before the elections were announced. NHAI’s approval comes days before the next Government, led by Narendra Modi, is sworn in.
Incidentally, of the nine approved projects, three are in Gujarat, the prime minister-designate’s home state.
Premium is the amount offered by a developer to the Government to bag the right to widen a road, maintain it, and collect tolls from road users over a 20-30 year period.
Policy contoursDevelopers can defer premium payment only if they do not collect enough toll revenue in a year to pay for it after servicing debt and operations and maintenance costs.
Also, they have to pay interest of 11 per cent on the premium deferred. The developers are also not allowed to declare any dividend until the shortfall in the premium is made good.
While allowing the deferment, the NHAI has made it mandatory for a developer to share toll-collection data with it on a real-time basis.
The NHAI said any developer found overstating the deficit in toll revenue would be asked to pay a penalty of 2.5 per cent interest on the gap.
According to the NHAI, the deferment value is as per current estimates and may change if the economy improves, resulting in higher toll collections.
The deferment is likely to be a huge comfort for lenders, as their debt obligation would now get priority over the premium payable to NHAI.