NHAI may halve upfront pay to highway builders
News: As per the media reports (Times of India), NHAI is working on the proposal to pay only 20% of the cost during the construction phase against the current norm of paying 40% of the project cost during construction period (and the rest amount in equal instalments during the remaining period of contract).
Views: While the contractors bear no risk on HAM projects as the responsibility of toll collection lies with NHAI, the equity requirement from developers would increase from current 12-15% to 16-20% of the overall project cost. This might decrease the ongoing cut-throat competition in HAM projects going forward favouring listed players with increase in private investment during construction phase. While it will be negative for sector especially smaller players, it will be slightly positive for listed road players with lesser competition.