In a change from their previous stance, road developers are now keen to bid for road projects if tendered on build-operate-transfer (BOT), provided the NHAI puts them out on the basis of viability where expectation of traffic is high. In the fast changing scenario, bankers are ready to back these projects if the termination clause in toll-operate-transfer (TOT) is made applicable to BOT projects, said an industry insider, adding that BOT was not being looked upon positively by banks because of the termination payment clause. In case of termination in a TOT project, NHAI‘s TPC (total project cost) will not be something which will decide the quantum of termination, but it will be the NPV (net present value) of the unexpired concession. So, if TOT termination clause is made applicable to BOT projects, bankers will be willing to back the projects. This means that termination payment will be on the basis of the future cash flow potential of the project, instead of the project cost that was fixed at the time of bidding. For developers, land acquisition continues to be difficult as a lot of projects are taken up where land acquisition to the tune of 15%, 20%, and in some cases 50% has been carried out but are incomplete due to lack of funds.
📅Published on:
29 August 2019
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