EGoM to fast track infra projects,says Nath

The EGoM will look into all the tricky issues revolving around project financing. As of now,there is no concept of project finance in the country as the RBI does not recognise securitised finance as tangible assets. In fact,one of the mandates of the EGoM would be to consider alternative financing models for the roads sector.

The minister said that the government had also asked the BK Chaturvedi committee to look into a suitable dispute resolution mechanism as $1-1.5 billion was stuck in disputes between the National Highways Authority of India (NHAI) and private developers. “The objective is to make it clear that claims are not treated as a mechanism of getting the government to finance part of the project and yet provide the developer the due reimbursement as per the agreement,” Nath said.

The minister also brought to light key issues related to discrepancies in computing the total project cost,which leads to problems related to finance and getting viability gap funding. “Consulting firms come up with figures that may well be beyond the margin of error,which delays financial closure,” the minister said. The ministry is seriously considering a proposal to get consulting firms involved in the business rated by rating agencies of national and international stature. The minimum rating would then,in most likelihood,be specified in the bidding document.

Nath also informed the industry that he would launch the bidding of the first mega road project running into over 600 km and costing over a $1 billion in the next four months or so. “Our ministry has identified six projects of this size in the states of Rajasthan,Madhya Pradesh,Gujarat and Maharashtra. The first project is expected to be in the range of Rs 5,000 crore with an intention to bring in foreign technology and investment in this sector,” he said on the sidelines of the conference.