P. Chidambaram
While fast tracking the stalled highway projects, the finance minister called for a careful approach and directed NHAI to be watchful legally in vetting proposals allowing substitution of concessionaires failing to match the laid down performance standards. As per the prevailing norms, lenders have the right to substitute concessionaires in cases of financial default. If the concessionaire defaults, the NHAI has to inform the lenders of its intention to terminate the contract and the lenders have to find a suitable replacement. In contrast, the road ministry wants the leeway to substitute developers when they don't meet project milestones rather than wait for a default to happen.

According to norms, when a concessionaire is being substituted and lenders are agreeable, a change will be required in the agreement with the original developer. Changing concessionaires can have a lot of legal implications because the companies being substituted may challenge the decision or make claims. The finance minister wants to have a thorough legal vetting, so that the government can be indemnified against such claims. As and when requires, a legal consultant from NHAI will be used to review the proposal and tie up loose ends so that developers don't hold up the process by filing claims and moving court. The consultant will also look into the legal implications of developers diluting equity in projects. In fact the ministry is trying to make sure that it is able to substitute concessionaires through a harmonious process and it will revise its proposal to the Cabinet after receiving the views of the legal consultants.