• NHAI plans Rs 6,000-crore boost for road developers stuck in litigation

    The National Highways Authority of India (NHAI) plans to release Rs 6,000 crore to developers stuck in litigation under the new policy announced at the end of last month, a measure that will help banks recover some stuck loans while also providing funds for stalled projects.

    The government has asked its departments and ministries along with public sector entities to release 75% of disputed amount where the developer or concessionaire has won an arbitration case.

    Niti Aayog, which piloted the policy, has written to ministries and departments to act on the decision quickly. At present, 123 dispute cases worth Rs 25,000 crore are pending with NHAI, including cases worth Rs 13,000 crore awarded in favour of private parties.

    “In overall cases that have gone against us till date, the amount has been Rs 13,000 crore. We have already amicably settled claims worth Rs 5,000 crore,” a senior NHAI official said on condition of anonymity.

    “So, 75% of the remaining Rs 8,000 crore that has to be released under the new guidelines works out to be Rs 6,000 crore. We’ll start paying that amount on case by case basis. The claims are related to around 20 companies.”

    The payment process will be initiated as soon as the private party sends NHAI a letter.

    “Now this will be dependent on the private party as it needs to have a bank guarantee to back up the award claim. We are also revising our agreement format so that the company doesn’t back out from bank guarantee,” the official said.

    Hindustan Construction Company (HCC), which has already been awarded claims worth Rs 3,400 crore against various government departments, has sought release of Rs 1,000 crore from NHAI.

    “On Tuesday, we received a letter from HCC asking for a payment of Rs 1,000 crore. We’ll start looking into their claims,” the official said. HCC had in a statement said it has Rs 3,200 crore arbitration award and 75% of it should be released.

    Under the new guidelines cleared by the Cabinet Committee on Economic Affairs, government agencies will pay 75% of the arbitral award amount to an escrow account against margin-free bank guarantee. The escrow account can be used to repay loans or to meet commitments in ongoing projects.

    The move will allow recovery of loans by banks and allow companies to speed up ongoing projects. A total of Rs 70,000 crore in various sectors is stuck under arbitration.

    “Construction companies are reeling under liquidity crunch… Even with the release of 75% of amount this would…allow them to make a variety of payments to banks, suppliers and bid for more contracts,” said Vinayak Chatterjee, chairman of Feedback Infra.  Justin Evans Authentic Jersey

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