NHAI relaxes termination clause for pvt operators
Will increase concession period to encourage players undertake highway expansions
Changing stance
Concession period is the time span for which the private operator is entitled to collect toll and maintain the project. It usually lasts for 20-22 years, including around three years of construction period
As per the revised provision, NHAI will increase the concession period for highway projects in a scenario of an upside in traffic
The concession period can be stretched to a maximum five years to help contractors get return on their investment in expansion of the project
Ashutosh Kumar. New Delhi
With an aim to encourage private concessionaires undertake expansion work on highway projects developed and operated by them, the National Highways Authority of India (NHAI) has relaxed the termination clause in the contract.
As per the clause, if the traffic exceeded a certain limit for three consecutive years, the developer had to undertake upgradation work on that stretch. The clause, however, barred the company from operating and collecting toll from the project if it failed to add more lanes to accommodate the increase in traffic.
"As per the revised provision, we will increase the concession period for highway projects in a scenario of an upside in traffic. The concession period can be stretched to a maximum five years to help contractors get return on their investment in expansion of the project," said A Didar Singh, member (Finance), NHAI, on the sidelines of a conclave on enabling regulation for investment in infrastructure.
Concession period is the time span for which the private operator is entitled to collect toll and maintain the project. It usually lasts for 20-22 years, including around three years of construction period.
"If the traffic crosses 60,000 passenger car units (PCU) per day, the developer would have to build an additional lane on either side of the highway stretch for which the incentive will now be provided," he added. PCU is the weightage of various types of vehicles. For example a car is one PCU, a mini truck is one-and-half PCU.
Clarifying the government stance on conflict of interest clause, Singh said the threshold cross-holding limit that competing bidders or consortiums can have has been also hiked to 25% from the present 5%. "The clause was included to curtail cartalisation. By increasing the threshold to 25%, we hope there will be more scope for mutual funds and private equity players," Singh added.
On the rationale behind increasing the cross-holding limit to 25% and not any further, Singh said, "We could not have raised it beyond that as it would have empowered companies to have a say in each other's management."



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