Revised model concession agreements for toll projects will safeguard interest of all stakeholders: CareEdge Ratings
investor confidence while safeguarding the interest of all stakeholders, the CareEdge Ratings said on Tuesday.
The ministry of road transport and highways (MoRTH) had last month revised the MCAs for bidding out toll road projects as it aims to bid out 53 projects, encompassing a total length of 5,214 km and a projected cost of Rs 2.10 lakh crore, for development under the BOT-Toll model.
“The revised agreements have incorporated changes to tackle execution woes, ensure funding support during the construction period and mitigate lender’s risk in case of exigencies,” it said, adding it will help address challenges encountered during the execution, operational, and termination phases of BOT toll projects.
“Access to at least 90% of the construction zone on the appointed date under the revised MCA is expected to substantially minimize execution hindrances and the extent of delinking for issuance of provisional commercial operations date (PCOD),” it said.
“Further, the authority’s right to terminate slow-moving projects in the intermittent phase besides gaining online access to the escrow account will nudge developers to focus on project execution on one side while facilitating the authority to undertake timely corrective actions in languishing projects,” CareEdge Ratings observed.
According to the CareEdge Ratings report, lender’s interest under revised MCA can be protected up to a maximum limit of 54% and the compensation mechanism from authority towards revenue loss under various situations will be positive.
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