Saturday, 25 Jul 2009
According to Mr A Didar Singh (finance), National Highways Authority of India member, an exit clause in road projects had been suggested to the finance ministry and it was in the orbit of consideration.

He was responding to suggestions made by leading industry players at the National Highways Development Conclave organized by the Confederation of Indian Industry.

Mr Hari Sankaran MD of IL&FS highlighted the need for financing frameworks that recognize the different phases of construction and the attendant risks. He said that the consortium or concessionaire should be seen as a key partner by the government and not just as a service provider.

Concurring with Mr Sankaran, Mr MK Sinha president & CEO of IDFC Project Equity Company Limited said "The equity in SPVs of completed projects must be unlocked so as to be able to churn high risk capital." He also advocated that the conflict of interest clause be raised to 26%. Mr Singh added that the limit is likely to be raised to 10%.

Mr Hemant Kanoria CMD of Srei Infrastructure Finance Limited spoke of the need to build the mezzanine capital market and suggested that IIFCL could play a role in this. Recently, as part of the stimulus package, IIFCL has been allowed to refinance 60% of bank lending in infrastructure, but he said that the banks were not coming forward and suggested that NBFCs in infrastructure financing should be allowed to avail of this facility, which would greatly improve their lending positions.

Mr Suneet Maheshwari CEO of L&T Infrastructure Finance Company Limited said "An exit clause would generate greater appetite to invest in roads sector. If the process and documentation was made more friendly and possibly more international investor compliant, it would help."

Mr GV Sanjay Reddy vice chairman of GVK Power & Infrasctructure Limited said "It was important that greater flexibility was brought about in infrastructure financing with regard to tenure, terms and structures available. Also, there should be more unbundling for greater efficiency. He said one time empanelment of companies entitled to bid for projects of certain value."

Mr Brijeshwar Singh chairman of NHAI outlined the need for greater private sector investment and the emerging public private partnership landscape. He said there was a consistent framework in place for encouraging private partnership. His presentation also informed the delegates about the status of different phases of the National Highway Development Program.

Mr Ajit Gulabchand CMD of HCC Limited and Mr Atul Punj chairman of Punj Lloyd Limited both spoke of the need for better and faster dispute resolution mechanisms. Referring to BOT contracts, Mr Gulabchand said there was a long gap between TCP and actual project cost. Mr Punj said that unrealistic bidding by contractors needed to be restricted by NHAI.

Mr Gajendra Haldea advisor to deputy chairman of Planning Commission said "The NHAI had been restructured to incorporate a member signifying the importance being given to enabling and facilitating private sector participation in road sector in the country. He added that state governments would be increasingly involved in rolling out PPP projects in the highways."

Full Story...

Posted by rjorr at July 25, 2009 12:48 PM