GADKARI SEEKS BANKS’ HELP TO FUND STALLED ROAD PROJECTS

NEW DELHI: Union road transport and highways minister Nitin Gadkari on Friday asked bankers to suggest ways to finance 56 highway projects worth thousands of crores that have been stalled because of developers failing to secure financial closure.

The minister made the remark after meeting top bankers including State Bank of India (SBI) chairman Rajnish Kumar , Union bank MD Rajkiran Rai, private sector lenders such as Indusind Bank as well as Life Insurance Corporation (LIC) chairman VK Sharma in Mumbai to discuss the financing issue related to the stuck highway projects.

All the stalled highway projects belong to the Hybrid Annuity Model (HAM), in which the government bears 40% of the construction cost while the developer invests the remaining 60 % of the cost of the project.

The new model not only reduces equity investments by developers, but also lowers initial capital outflow for the National Highways Authority of India (NHAI).

“There are 104 HAM projects worth ₹1.25-1.5 trillion. Of these, 56 are yet to secure financial closure. We want banks to finance them and at today’s meeting we’ve asked banks about their issues in funding these projects,” Gadkarisaid after the meeting.

Assuring banks of all the support from his government, Gadkari said: “There are two kinds of projects, those which came up before 2014 and those awarded after our government came to power. There is no problem with the latter projects. I am not indulging in political blame game. We have resolved issues related to many of the projects awarded before May 2014,” Gadkari added.

One of the suggestions given by the banks was non-funding during the construction stage as the only assurance of payback from the HAM projects is the annuity from the NHAI.