Funds worth Rs 980 crore have been released as against Rs 2,630 crore claims made to NHAI in the last six months since introduction of the arbitration scheme, India Ratings and Research (Ind-Ra) today said.
Funds worth Rs 980 crore have been released as against Rs 2,630 crore claims made to NHAI in the last six months since introduction of the arbitration scheme, India Ratings and Research (Ind-Ra) today said.
"In the last six months since introduction of the arbitration scheme INR 9.8 billion funds have been released compared to INR 26.3 billion claims made to National Highways Authority of India (NHAI)," Ind-Ra said in a statement.
The pace of release of arbitration claims for infrastructure developers has gained limited traction, due to the inability of road developers/project companies to provide bank guarantees, it said.
Due to financial difficulties faced by many developers in the sector, Ind-Ra believes that banks are wary of exposure in bank guarantees, without adequate margins/collateral.
The government's initiative to release 75 per cent of locked amount in arbitration awards has thus had a limited impact on the liquidity of developers except a few road developers.
"As per NHAI data, HCC has been the biggest beneficiary receiving INR 3.80 billion (out of total claims of INR 10.8 billion) while the balance claims are pending due to absence of BGs (Bank Guarantees) or opening of Escrow Accounts," it said.
Other notable beneficiaries who received full claims included IRB Infrastructure Developers Ltd and Shapoorji Palonji.
"Companies which submitted claims (in the absence of BGs) but have not received any funds are Oriental Structure Engineers Pvt Ltd and its group companies...IL&FS Engineering and construction company ltd and Reliance Infrastructure Group," it added.
Ind-Ra notes that non-submission of bank guarantees despite reminders from NHAI and non-opening of Arbitral Award Escrow Account (escrow account) are the key deterrent to the success of the scheme initiated by the government.
The scheme was approved last year and the NHAI started accepting claims under the scheme on December 7, 2016.
(This article has not been edited by DNA's editorial team and is auto-generated from an agency feed.)
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