The Prime Minister's Office has asked the environment ministry to relax the clauses in the relevant laws to speed up clearances for road projects.

THE empowered group of ministers (EGoM) for hydel power projects in Arunachal Pradesh will find it tough to get the ministry of environment and forests (MoEF) on board for the proposed all-at-a-time clearance mechanism for supporting infrastructure projects.

According to sources, at the upcoming EGoM meeting the power ministry will pitch for a simultaneous process for environmental and forest clearances as well as the approvals for land acquisition and preparation of detailed project reports (DPRs) for supporting infrastructure projects like roads and bridges.

Work could soon begin in a clutch of stranded highway projects with likely combined investments of over R20,000 crore, as the Union environment ministry is set to give them approvals in one go.

The 555-km Kishangarh-Udaipur-Ahmedabad project from which the developer GMR Infrastructure pulled out in early January citing huge delays in clearances, has now got all requisite approvals from the ministry of environment and forests (MoEF). According to sources, with Gujarat, one of the two states through which the highway passes, also giving forest clearance, the MoEF has given the green signal for the project.

The Rajasthan portion of the six-laning project was cleared earlier and in a meeting today, the Gujarat portion was also approved, paving the way for the project to be cleared from the angles of both environment and forest regulations, a ministry official said.

The woes of investors in highway projects don't seem to end. The new guidelines issued by the environment ministry, allowing work on non-forest land while clearance for projects involving diversion of forest land is pending, are cumbersome and would not facilitate investments, developers feel.

According to official sources, the developers have written to the environment minister Jayanthi Natarajan, roads minister CP Joshi, NHAI Chairman RP Singh and the department of economic affairs in finance ministry, stating that the condition that in order to begin work in non-forest land, the user agency must explicitly provide for a “technically feasible alternative alignment” for segments that fall in forest land is too difficult to be complied with.

Long-term lenders like IIFCL and IDBI Bank are unlikely to fund road projects where land acquisition is incomplete, a move that could scuttle plans to award projects of 8,000 km this fiscal year. Lenders and builders have approached the finance ministry, road ministry and NHAI, insisting that road contracts should not be awarded without all clearances in place.

“We are not taking up new projects unless 100% land acquisition is done. We are taking up the issue with NHAI,” IIFCL chairman SK Goel told FE. “We feel other lenders will follow suit,” he added.

Upset over the failure of the ministry of environment and forests (MoEF) to frame forest clearance norms as directed by the Supreme Court and the resultant delays in road projects, the National Highways Authority of India (NHAI) is planing to take up the matter with the court afresh. The authority’s move comes after it secured a favourable opinion from both the law ministry and the Cabinet secretariat, official sources told FE.

Delays in environmental approvals — usually attributed to the existing policy of linking the same to forest clearances — and procedural issues have affected implementation of national highway projects worth R23,000 crore. This is at a time the Prime Minister’s Office and finance ministry are asking all wings of the government to make concerted efforts to speed up infrastructure projects to accelerate economic growth.

In what could bolster the confidence of lenders in highway projects, they may be given the facility of a charge on the receivables. Currently, the lenders have a lien on the escrow account where the receivables are deposited but they hardly get to exercise the right. From the escrow account, the sovereign dues are paid first, followed by the cost of operation and management and National Highways Authority of India (NHAI) premium. The banks are the last to get access to the account and the funds get exhausted before their turn.

The government is considering a proposal to allow debt restructuring for real estate projects that face delays due to sovereign clearances. It is also considering creating a sub-category of commercial real estate-housing to allow an extended repayment period to developers.

As per the current policy, any loan given to developers for non-infrastructure sectors turns into a non-performing asset (NPA) when the project gets delayed by more than six months after the date of commencement of commercial operations (DCCO) without any payment made to the lenders. The DCCO dates means the time when the developer actually commences construction after getting the necessary approvals. After this period, banks usually declare the loan as an NPA if repayments are not made for a period of 90 days.

New Delhi In a bid to spur real estate players to build homes for the low-income population, the proposal to allow them to access end-use linked external commercial borrowings (ECBs) for low-cost housing will soon be implemented. According to a senior government official, “the Reserve Bank of India (RBI) is going to notify the scheme in a few days”.

The scheme would impose stiff end-use norms to ensure that overseas funds are not used by developers for other purposes. ECBs are much cheaper than local debt due to near zero interest rates in many developed countries. But the actual interest rate would depend upon the lenders’ assessment of the borrowers, economic viability of projects, expected returns and the credit rating of the borrower.