New road building framework targets proxy control, delays

The government is putting in place a stricter, more transparent framework for harmonious substitution of highway concessionaires amid concerns that developers were using proxies to retain control and lenders were exercising excessive discretion, two people aware of the development said.

- Subhash Narayan

The new framework aims to curb the practice of developers using proxies.

(MINT)

The revised framework, being incorporated into the new model concession agreement (MCA) for build-operate-transfer (BoT) toll projects, empowers the government to replace developers facing prolonged delays in projects or liquidity stress while laying down clear eligibility criteria for new concessionaires and step-by-step procedures for such substitution, the persons cited earlier said on the condition of anonymity.

Harmonious substitution is a collaborative, pre-emptive mechanism to replace a distressed operator smoothly and avoid disputes. This is triggered when financial stress is detected before an outright breach or default, such as missed project deadlines or substandard construction quality, occurs.