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NHAI decision to descope pending RoW without reducing construction period positive for developers: ICRA

New Delhi: The decision by NHAI to descope pending proper of approach without reducing construction period is a positive for freeway builders engaged on BOT-HAM initiatives and makes the method smoother for them, rating agency ICRA said on Wednesday.

The National Highways Authority of India (NHAI) had issued a regular working process (SOP) pertaining to strategy in the direction of de-scoping the pending proper of approach (RoW) for BOT(construct, function, switch) HAM initiatives.

Basis the SOP, instantly after the expiry of the period of appointed date (date on which mission begins) plus 20 per cent of construction period, the pending RoW will probably be faraway from scope of labor and bid mission price (BPC) will probably be revised primarily based on the unbiased engineer’s evaluation.

“This augurs well for HAM (hybrid annuity mode) developers and would make the process less obstructive,” ICRA said including in its earlier analysis launch in February 2020 it had highlighted the land acquisition associated challenges confronted by HAM initiatives leading to delay in announcement of appointed date in addition to provisional completion certificates due to delay in de-scoping.

There have been operational challenges in implementing automated de-scoping due to which the announcement of provisional completion certificates is getting delayed for many under construction HAM initiatives, it said.

Elaborating Rajeshwar Burla, Vice President, Corporate Ratings, ICRA said, “For most of the under-construction HAM projects, the RoW available within the stipulated timelines is in the range of 88-92 per cent. From the authority’s perspective it becomes onerous to de-scope and re-tender the remaining portion to a new contractor.”

With the de-scoping subject getting resolved, the larger danger that exists for HAM initiatives which remained unaddressed is the prevailing low financial institution charges adversely affecting their total money inflows, the assertion said.

Burla added, “The RBI bank rates are expected to remain at low levels to revive growth and mitigate impact of Covid-19 on the economy. Low bank rate would reduce the overall inflows for a HAM project thereby adversely affecting its debt coverage metrics and returns to the investors.”

Introduced in January 2016 to revive investments in highway infrastructure initiatives, under HAM mission the federal government releases 40 per cent of the overall mission price and the steadiness 60 per cent has to come from the builders.

NHAI annuls Rs 2,193-cr bid gained by IRB Infra for BOT mission in West Bengal

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