NHAI gets cracking on developers exiting road projects midway

With some road developers expressing their inability to complete projects and threatening to exit midway, the National Highways Authority of India (NHAI), the central agency that builds highways, has decided to go tough on defaulters.

With some road developers expressing their inability to complete projects and threatening to exit midway, the National Highways Authority of India (NHAI), the central agency that builds highways, has decided to go tough on defaulters.

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To prevent “willful default” on part of concessionaires, the road ministry has decided that in recent cases where developers had terminated their contract midway, NHAI can not only invoke security deposit as per law but also debar them from bidding in future projects for the next five years.

It was decided in a meeting chaired by road minister CP Joshi on January 3 to review the progress of highway projects. “...It was decided that NHAI can take action like invoking their (concessionaires) security deposit as per law and debarring them from further participating in tender in any form for the next five years. This will help to check willful default on part of concessionaire,” reads the minutes of the meeting.

The decision comes in the wake of two highway developers — GMR Infrastructure and GVK — which bagged the project to build 555 km long Kishangarh-Udaipur-Ahmedabad highway and the 330 km Shivpuri-Dewas stretch respectively in 2011— serving termination notice to NHAI recently. Both cited delay in getting environment clearance as reason for exiting the project.

Delay in getting environment clearance has even forced the NHAI to drag another government agency – the Ministry of Environment and Forest – to the Supreme Court on Wednesday. Failure to get this crucial clearance without which work can’t start has resulted in 17 projects worth over Rs. 1000 crore getting stuck.