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The highways ministry has extended the duration of a liquidity-related relaxation provided to road project contractors in response to Covid-19 that enabled monthly payment for work done between 1st April to October end. The relaxed payment mechanism was issued on Monday for hybrid annuity model (HAM) and engineering, procurement, and construction (EPC) contracts to provide more liquidity in the hands of contractors. They will be given funds on a monthly payment basis.

Further, the MoRTH notification said, “In case of build-operate-transfer (BOT)/toll-operate-transfer (TOT) concessionaire, for reduction in collection of user fee, the concession period is to be extended as per provisions in the concession agreement.” According to the concession agreement, the loss in collection of user fees is compensated by extending the concession period till the daily collection touches 90% of the average daily fee.

The ministry further said, “For all national highway tolling, reduction in collection fees may be compensated in accordance with the user fee collection contracts.”

Time will be extended as per the achievement of financial closure in the concession agreements between April-June 2022 for a period of one month from the due dates in accordance with the provisions of the contract as well as the location of the project.

The National Highway Authority of India and other implementing agencies have been directed by the ministry to make direct payments to approved sub-contractors through escrow accounts. Further, MoRTH has concluded to reduce performance security for existing 5-10% to 3% of the value of the contract for the existing contracts, exception of all those that are involved in the arbitration.