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Proposal on rationalization of premium on Highway Projects approved

Stressed road developers will be able to reschedule their premium commitments for highway projects with the finance ministry approving the proposal submitted by a panel headed by Prime Minister’s economic advisory council chairman C. Rangarajan on Tuesday.

In a letter to the ministry of road transport and highways, the finance ministry said that the recommendations of the expert group on the policy for rationalization of premium have been cleared subject to three conditions.

The conditions include limiting the definition of financial stress to shortfall in premium payments as against cash shortfall on account of operations and maintenance expenses, and debt servicing. The other conditions include that the road ministry notify a cut off date for the “special dispensation” beyond which projects will not be eligible for this relief and enabling the National Highways Authority of India (NHAI) to impose any conditionality to protect government interest.

Premium here is the money that road developers agree to pay NHAI for building highways and collecting toll from users. The suggestions made by the Rangarajan panel aim to ease the financial pressure on developers and kick-start the projects, which will also assist in unlocking bank loans tied up in these. The Rangarajan panel had submitted its recommendations on 22 January.

Source-On Request