NHAI to Award More Projects through EPC Route

The National Highways Authority of India (NHAI) is likely to award more of road projects under the engineering, procurement and construction (EPC) method this fiscal, as both road developers and banks find it difficult to spend the money required for more projects under the hybrid annuity model (HAM). According to Edelweiss, the focus on EPC will be positive as road companies would not be required to cough up equity required for such projects. Even for EPC projects, it is difficult to procure the performance and mobilisation bank guarantees. With developers struggling to finance projects, analysts say many developers are in talks with financial institutions for forging partnerships. According to Edelweiss, such partnerships may result in the two parties sharing the burden of equity infusion for HAM projects during the construction stage with the financial institutions buying out the developer post the commercial operations date (COD). In fact, there have already been two such deals, with both Dilip Buildcon and MEP Infrastructure Developers selling their portfolio of six HAM projects each.