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Permitting 100 percent equity divestment after two years of construction completion for all BOT projects irrespective of year of award

The Cabinet Committee on Economic Affairs, chaired by the Prime Minister Shri Narendra Modi has amended its earlier approval dated 13th May, 2015 for permitting 100 percent equity divestment after two years of construction completion for all BOT projects, irrespective of year of award. The approval would allow the concessionaire(s)/promoter(s) to use proceeds from the sale of divested equity in one or more of the following:

(a) Incomplete National Highway Authority of India projects.

(b) Any other highway projects.

(c) Any other power sector projects; and

(d) to retire their debt to financial institutions in any other infrastructure projects.

This will result in physical completion of languishing infrastructure projects. This in turn will bring relief to citizens /travellers in the concerned area.

The main object of the approval is to expedite award and implementation of highway projects in the country by making additional funds available for investment in projects. Consequently, it will facilitate uplifting socio-economic condition of the entire nation due to increased connectivity across the length and breadth of the country. This will also lead to enhanced economic activity.


The Cabinet Committee on Economic Affairs (CCEA) in its meeting held on 13th May, 2015 approved the proposal of the Ministry of Road Transport and Highways, to make applicable mutatis mutandis the provision of Model Concession Agreement (MCA) pertaining to the exit option for selected bidder/consortium members together with its/their associates, i.e. Clause-7.1(k), read with the definition of ‘change of ownership’ in Article-48, to all BOT (Toll) and BOT (Annuity) projects awarded till 30th September 2009, with the modification that the equity so divested, be invested by the promoter(s), in their incomplete National Highways Authority of India (NHAI) projects. Subsequently, NHAI issued policy circular dated 9th June 2015 with this effect.

The National Highways Builders Federation (NHBF), subsequent to the policy circular issued by NHAI, made a representation that all developers are not having incomplete highways projects, thus they are denied of this facility for no fault. Most developers in the infrastructure sector are carrying highly leveraged balance sheets at their Holding Companies level, as they have been simultaneously supporting various infrastructure Special Purpose Vehicles (SPVs) which are under severe stress. These developers can be allowed to utilize funds so ngenerated to reduce their existing corporate debt or for investment in any new infrastructure project that need not alone be highways projects, as most developers have multiple verticals in the infrastructure sector.

NHAI after examining the representation of NHBF is also of the opinion that full benefits of this policy decision/circular can also be leveraged, if certain amendments are made to the above said decision. NHAI has also suggested that the policy circular dated 9th June 2015 may be amended accordingly to make the policy applicable in its true spirit.


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