MoRTH disburses ₹18,700-cr to contractors in two months
To offset the adverse impact of Covid-19 on the road infra developers reeling under severe cash crunch, the ministry of road transport and highways (MoRTH) and the NHAI have adopted faster payment mechanisms and disbursed ₹18,700 crore to developers between April and May this year. The disbursals are up 46 times from ₹400 crore released during the corresponding period in last year. NHAI disbursed ₹10,295 crore between 22 and 31 March and ₹15,000 crore in April-June. Both MoRTH and NHAI shifted from a milestone-based payments system to a monthly payments mode. In the earlier system, billing and payments under the engineering, procurement, construction (EPC) model were linked to the completion of pre-determined physical milestones. For the hybrid annuity model (HAM) projects, NHAI released funds for working capital needs before the milestones were completed. The funds were offered at 200 basis points above bank lending rates and offered low-cost working capital to developers. The payments are later set off against settlements that the government owes to contractors under the HAM projects.
📅Published on:
04 August 2020
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