Road developers have asked the government to not only share profits under the build-operate-transfer mode, but also share the risk or loss associated if a project goes awry. In a letter to road transport and highways minister Kamal Nath, developers have called for a risk sharing clause to be inserted in the model concession agreement (MCA) which governs the public private partnership (PPP) contract for the roads sector. Developers want the government to not just share toll revenue but also the burden emerging out of delayed or stalled projects.

“It is often the case that land acquisition is not completed and work gets started. In such cases projects get delayed but bank loans have to be repaid even though toll collection has not started. We want the government to devise a risk sharing system,” National Highways Builders Federation director general M Murali said. the federation is a representative body for major road developers including Reliance Infrastructure, GMR, L&T, Madhucon, SREI and Gammon, among others.

Developers have also asked the government to consider deleting the termination clause according to which the developer gets no money if the project is left incomplete. “This adds to procedural glitches and prevents contractors from bidding for projects,” the federation says. This has also been a reason for the NHAI getting only single or no bids for some of its projects announced last year.

Developers have also raised the issue of funding with the minister. The minimum average maturity of loans for which India Infrastructure Finance Company Ltd can sanction is 10 years. If the concession period is 15 years, then 12 years would be for toll collection and three for the construction period. In effect loan will mature seven years into the tolling period. Hence, IIFCL may be exempted from this stipulation of minimum average tenure of loans. Another demand is that the total project cost be fixed in line with market rates considering the prevailing interest rate.