Resource detail

The India Highway Ministry on December 12 2013 accepted the formula proposed by a high-level panel for restructuring the annual premium owed to the government by developers of stressed road projects. The panel, headed by Prime Minister's Economic Advisory Council chairman Mr C Rangarajan, had circulated its draft report earlier in the day. After receiving comments from the National Highways Authority of India, the Planning Commission and Department of Economic Affairs, the final report would be sent to finance minister P Chidambaram, sources said. The report has suggested that developers of stressed highway projects be asked to pay only 25% of the annual premium committed upfront for the first three years of the project. Developers would have to pay 50% thereafter, but if there is any cash surplus after debt servicing and meeting O&M expenses, this too, would have to be paid. Developers must fulfill all their premium obligations three years before the contract expires.