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Looking to slash Rs 70K cr arbitration liability via conciliation: NHAI Chief

The National Highways Authority of India (NHAI) is looking to settle a majority of its arbitration cases, with claims running over Rs 70,000 crore, through conciliation, a move that is likely to reduce its liabilities.

, ET Bureau|
Last Updated: Jan 13, 2020, 07.45 AM IST
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NHAI's main focus at present is to complete the first phase of Bharatmala.

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New Delhi: The National Highways Authority of India (NHAI) is looking to settle a majority of its arbitration cases, with claims running over Rs 70,000 crore, through conciliation, a move that is likely to reduce its liabilities, the authority’s chief said. “This is the priority of the organisation,” Sukhbir Singh Sandhu, chairman of NHAI, told ET in his first interview since taking charge. “We are calling all parties, saying let’s sit across the table and decide instead of first going through arbitration, high courts, speed courts. It takes years and years.” NHAI has around 180 cases in arbitration with claims at over Rs 70,000 crore. “If we go into conciliation, the payout will be less than Rs 17,000-18,000 crore, because arbitration is a long-drawn process, and in conciliation, you get the money almost immediately,” Sandhu said.

Historical payouts in arbitration cases has been around 25%. Sandhu said three conciliation committees of NHAI have also met with highways minister Nitin Gadkari, who also asked them to expedite the process. “The target is to resolve as many cases as possible through conciliation process,” Sandhu said.

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The government wants to remove entry barriers for small investors in its asset monetisation drive, Sandhu said, adding that engineering, procurement and construction (EPC) followed by monetisation of projects within three years is most the suited form of managing assets. “In the present scenario, possibility of EPC has gone up and justifiably so. EPC is also not bad, because within three years, we are able to monetize it and there is no risk to the Toll-Operate-Transfer (TOT) operators,” Sandhu said. Sandhu said that the government has put out the revised model concession agreement for Build-Operate-Transfer projects and NHAI will invite bids soon after receiving comments from stakeholders.

Talking about the TOT mode of asset monetisation, recently revisited to allow NHAI better flexibility in decision-making and concession period, Sandhu said that the recent packages have been downsized to bring in a wider pool of investors, and that not many investors can afford to invest as much as Rs 5,000 crore in these projects. “As a country we must also build our own capacity. For how long will we depend on foreign pension funds. The intention is, almost two to three months you will have one TOT package,” Sandhu said, adding that the size of the TOT packages will depend on the market conditions. NHAI plans to raise about Rs 1 lakh crore through asset monetisation by 2024.

Sandhu said NHAI’s main focus at present is to complete the first phase of Bharatmala, while ensuring that only financially viable projects are picked up. The first phase of the Bharatmala program approved in 2017 includes construction of 24,800 km of national highways, in addition to 10,000 km balance road works under the national highways development programme.

NO WORRY ABOUT DEBT REPAYMENT
“When we find such big projects, the debt is bound to increase. We are very comfortable about our repayment. We should worry when there is a doubt about the repayment capacity,” Sandhu said. NHAI has raised about Rs 2.2 lakh crore till December 2019. Talking about NHAI’s Infrastructure investment trust (InvIT) for which it received cabinet nod in December, Sandhu said that the authority has prepared a strict timeline for various processes involved and the funding instrument should be ready in four months. Under InvIT, highway projects will be bundled to form a special purpose vehicle to be offered to investors.

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