Mesco Steel
Responding to the demand from the highway builders, the National Highways Authority of India (NHAI) has decided to rework the model concession agreement (MCA) for highway projects keeping in mind the on-going bout of recession in the Indian economy. In this connection the nodal agency has asked developers, lenders, consultants and industry bodies to give their feedback on the current model concession agreement in the context of the changed economic scenario, said sources adding that the authority has received suggestions, including making lenders a party to the concession agreement that currently is between the concessionaire and NHAI, enabling quicker equity transfer, updating the total project cost at the time of inviting bids and a mechanism to address cost escalation after signing the concession agreement.

It may be recalled that last time changes were made to the model concession agreement for highway projects in 2009, in line with recommendations of the B K Chaturvedi Committee.

Other suggestions include assigning the official date for the commencement of a project, or the so-called appointed date, after environmental clearances are in place, at least 80% of the land required is acquired and the concessionaire has tied up required funds. As per the prevailing norms though the agency acquiring land gets legal right for buying land from the owner till the appointed date, many times it has been seen that hurdles arise during the actual change of hands i.e. paying of the compensation. So, actually land is not available for construction. It is now being suggested to give the appointed date only after the compensation has been paid and physically the land is handed over and after that NHAI will take it to an inter-ministerial group for discussing the rationale for the changes requested, they added.