NHAI to set up ARC for delayed projects

Aug 22 2014, 03:25 IST
Comments 0
SummaryThe board of National Highways Authority of India (NHAI) on Thursday approved a proposal to set up an asset reconstruction company (ARC) to revive stressed projects.

The board of National Highways Authority of India (NHAI) on Thursday approved a proposal to set up an asset reconstruction company (ARC) to revive stressed projects.

RP Singh, chairman NHAI, told FE that an asset management company (AMC) will be formed in which NHAI will have a 25% stake with the remaining 75% being offered to financial institutions. "A strategy for the ARC will be drawn up to decide how the assets will be taken over," Singh observed, adding that NHAI was slated to have detailed discussions with the Indian Banks' Association (IBA) soon. Singh said the corpus for the ARC had not been decided.

Experts say once the ARC takes over an asset, it will either complete the project on its own and recover the investment by tolling or divest it. In cases where the construction has not started at all, the ARC could even bid out the project afresh. The idea is to speed up construction of stuck projects and provide comfort to the lenders.

The board approved the proposal following the endorsement by the IBA and the department of financial services. "The proposal met the approval of all the members barring the planning commission," Singh said.

Currently, the total debt exposure of commercial banks to road sector is around R160,000 crore, and around 20-30% of this is stuck in projects facing delays.

Ads by Google

More from Economy

Reader´s Comments
| Post a Comment
Please Wait while comments are loading...