Hybrid-annuity projects are the ones where 40% financing is done by the government and the remaining by the contract developer.
Meanwhile, the Ministry of Road Transport and Highways has prepared a list of national highway projects that turned “chronic” primarily due to issues relating to land acquisition, which impaired construction. Banks are reluctant to re-finance these projects because of their non-performing assets position.
Even as the government and the National Highways Authority of India (NHAI) re-tendered some contracts, global investors such as Macquarie, Brookfield and Cube Highways picked up equity in highway projects from private promoters.
Experts are of the view that some road developers had been aggressive while bidding for projects but faced difficulties in arranging equity because their balance sheets were leveraged. Also traffic projections for highway contracts made by the companies were overestimated.
Some highway projects saw a pullback from foreign institutional investors because of issues such as land acquisition, environment and forest clearance.
These investments came after the Cabinet in May 2015 approved an exit policy that permitted concessionaires to divest 100 per cent two years after the completion of construction.
Gadkari is believed to have discussed radio frequency identification with the banks. NHAI introduced radio frequency identification (RFID) technology at toll plazas in February 2014. The Indian Highways Management Company (IHMC) was given the job of implementing ETC (electronic toll collection) projects.
Currently, four banks — State Bank of India, ICICI Bank, Axis Bank and IDFC Bank — are authorised to issue the RFID tag.