Premium recast not enough to revive stalled highway projects.

The Government's proposed premium rescheduling package may help financially-strapped highways projects already under various stages of execution.

But it is unlikely to help much if the aim is to jump-start over 4,000 km of projects where construction is yet to start.

There are three main reasons for this.

The first is project delays, for which the Government's own tardiness in giving environmental and forest clearances, and making available encumbrance-free land to developers, are partly responsible.

In fact, GMR Infrastructure cited precisely the above factors while issuing termination notice on the National Highways Authority of India (NHAI) for six-laning of a 556-km stretch from Kishangarh to Ahmedabad via Udaipur in January.

Even the idea of premium rescheduling - wherein developers could postpone these payments even while keeping their net present value over the entire concession period unchanged - was floated almost a year ago when GMR itself proposed it to preserve the viability of the single largest project awarded during the UPA regime.

The NHAI Board had even approved GMR's proposal in March. But no decision has since been taken.

But delays in regulatory clearances have led to increased projects costs. That constitutes the second reason why mere premium rescheduling may not help.

HBL