GMR Infra wants payments in key roads project rescheduled

New Delhi: After choosing not to take the lifeline in 2013, GMR Infrastructure Ltd has now written the roads ministry asking for its payments in a key roads project to be rescheduled if it is to restart work on it, two of the ministry’s officials said on condition of anonymity.

The move comes 10 months after the government approved a policy to allow road developers strapped for finances to reschedule their financial commitments including the up-front so-called premium they pay the National Highways Authority of India (NHAI) for the rights to build highways and collect toll.

It also comes nearly two years after GMR walked away from the Rs.6,000 crore Kishangarh-Udaipur-Ahmedabad highway project.

“GMR wants 75% of the premium to be rescheduled. The other condition is that if there is any surplus in toll collection left after servicing debt and premium obligations, it not be withdrawn by NHAI and be left in the escrow account to be used for maintenance of the project when the need arises,” said one of the officials.

GMR is separately fighting a court case against NHAI seeking a termination of the agreement to widen the highway stretch in Gujarat on the grounds that the latter failed to get land and environment clearances for the project in time.

GMR’s revival of interest may well be attributed to a revival of sentiment after a change of government last May and more liberal lending norms for infrastructure projects announced by the central bank (the so-called 5:25 scheme that allows banks to refarm the debt after every five years, thereby funding projects with long timelines).

A GMR spokesperson declined to comment.

The proposal to rationalize premium dues was first mooted after the initial rounds of talks between GMR and NHAI in 2013, with the aim of easing some of the financial pressure on developers and consequently restart stalled projects.

The move was prompted by a sharp slowdown in highway projects in 2012-13, with just 1,322km of road projects being awarded by the ministry compared with a target of 9,500km.

It makes sense to write in the premium rescheduling into new concession agreements between developers and NHAI, said Parvesh Minocha, group managing director at infrastructure consultancy Feedback Infra Pvt. Ltd.

“With RBI (Reserve Bank of India) now allowing the 5:25 scheme even for existing projects, many of the concerns are already addressed at the institutional level. Additionally, changes in the macro environment, viz. steep decline in petroleum prices, expected downward revision of borrowing rates, etc., will impact the projects positively,” he added.