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Road companies payment rejig: Rangarajan panel submits report

<p style="text-align:justify"><span style="font-family:arial"><span style="color:#696969"><span style="font-size:11px">The C Rangarajan committee that was appointed to decide on rescheduling premiums for road projects has submitted its recommendations to the roads ministry.&nbsp;</span></span></span><span style="color:rgb(105, 105, 105); font-family:arial; font-size:11px; line-height:1.6em">The recommendations, when approved by the finance minister, may offer some respite to struggling infrastructure companies that had been requesting for easier payments terms in the face of the economic slowdown and high interest rates.&nbsp;</span><span style="color:rgb(105, 105, 105); font-family:arial; font-size:11px; line-height:1.6em">Premiums are the amount road developer&rsquo;s pay to the National Highways Authority of India, in lieu of being awarded the project and given the right to levy tolls.</span></p> <p style="text-align:justify"><span style="font-family:arial"><span style="color:#696969"><span style="font-size:11px">The recommendations of the Rangarajan panel, however, are different from those suggested by the NHAI.</span></span></span></p> <p style="text-align:justify"><span style="font-family:arial"><span style="color:#696969"><span style="font-size:11px">While NHAI had said premiums to the tune of 75 percent should be restructured for the first three years of a project, along with a restructuring of 50 percent from the fourth onward, the Rangarajan panel has said the a loan should be offered through the revenue shortfall mechanism if annual toll collections cannot cover debt servicing, operations and maintenance&nbsp;related costs.</span></span></span></p> <p style="text-align:justify"><span style="font-family:arial"><span style="color:#696969"><span style="font-size:11px">Loans at an interest rate of bank rate plus 2 percentage points can be offered to meet up the revenue shortfall for stressed highway projects, the panel has said.&nbsp;</span></span></span><span style="color:rgb(105, 105, 105); font-family:arial; font-size:11px; line-height:1.6em">It remains to be seen if stressed highway developers subscribe to this bailout scheme because interest rate according to many highway developers is too high.</span></p> <p style="text-align:justify"><span style="font-family:arial"><span style="color:#696969"><span style="font-size:11px">Source-On Request</span></span></span></p>