Union Cabinet clears exit policy for developers of highways

On 13 May 2015, the Union Government allowed developers to exit highway projects two years after they are completed, a move that will unlock investments worth ₹ 4,500 crore and provide renewed thrust to the sector.

The Cabinet Committee on Economic Affairs also approved a special intervention for the projects that are at advanced stages of completion but are stuck due to lack of additional equity or the lender’s inability to disburse further.

During the last few years, public-private partnership (PPP) projects have not been able to attract bids, one of the primary reasons being lack of availability of equity in the market among qualified bidders.

This would help unlock equity from completed projects making it potentially available for investment into new projects. Besides, it will harmonise conditions uniformly across all concessions signed prior to 2009 with the policy framework for post-2009 contracts which permit divestment of equity up to 100 per cent, two years after completion of construction.

The Government hopes that about 16 such projects languishing in various parts of the country where the public is facing difficulty on account of incomplete works will benefit from this decision. This will also add momentum to the overall growth of the highways sector in India, which is already on the path of revival.

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