Now, developers can divest 100% equity in road projects

The Cabinet Committee on Economic Affairs on Wednesday gave the go-ahead to developers for divesting 100 per cent equity in highway projects after two years of completing such schemes, a move that is expected to unlock investments to the tune of Rs 4,500 crore in the sector.

The decision is aimed at fast-tracking contracts and implementation of highway projects in the country by making additional funds available for investment.

The approval would allow the highway developers to use proceeds from the sale of divested equity in incomplete projects of NHAI or any other road projects besides any power sector projects or to retire their debt to financial institutions in any other infrastructure works, an official statement said.

This will result in physical completion of infrastructure projects that have been held up. This in turn will bring relief to road users in the concerned area, the statement added. There are 80 such Build, Operate and Transfer (BOT) projects awarded prior to 2009 that have been completed and the locked in equity in these projects works out to approximately Rs 4,500 crore, an official said.

Once this amount is unlocked and reinvested in new projects, it could support 1500 kms of new highways on PPP mode reviving the response to BOT projects. During the last few years, public-private partnership (PPP) projects have not been able to attract bids; one of the primary reasons being lack of availability of equity in the market among qualified bidders. This move will help unlock equity from completed projects making it potentially available for investment into new projects, the statement added.