Norms relaxed for working capital needs of road builders
ROADS & HIGHWAYS

Norms relaxed for working capital needs of road builders

The Ministry of Road Transport and Highways (MoRTH) has reportedly decided to relax norms to release partial payment or a working capital advance to road and highway builders for the work they have carried out, even if the builder has failed to achieve the construction milestone set by the authorities. The move is aimed at improving the liquidity of builders and to help complete projects stuck due to a funding crunch.

As reported, the provision for the advance will be extended to all highway projects executed with 100 per cent government funding or EPC (Engineering, Procurement, Construction) contracts as well as for projects under the Hybrid Annuity Model (HAM) mode. For contracts under the EPC model, the government releases the entire payment as and when a builder achieves the project milestones during construction. In the case of projects under the HAM mode, government agencies pay only 40 per cent of the cost during construction in five equal instalments. The remaining amount is released in 30 biannual instalments, which commences six months after the project is completed. As per a circular released by MoRTH on the norms relaxed, contractors availing this advance payment will have to pay the interest when the final payment is released, once the set milestone is achieved. For instance, NHAI or any other road owning agency can give the interest bearing working capital advance to the road builder even if it has completed only 5 km of a highway stretch against the set milestone of 10 km for release of payment.

The Ministry of Road Transport and Highways (MoRTH) has reportedly decided to relax norms to release partial payment or a working capital advance to road and highway builders for the work they have carried out, even if the builder has failed to achieve the construction milestone set by the authorities. The move is aimed at improving the liquidity of builders and to help complete projects stuck due to a funding crunch. As reported, the provision for the advance will be extended to all highway projects executed with 100 per cent government funding or EPC (Engineering, Procurement, Construction) contracts as well as for projects under the Hybrid Annuity Model (HAM) mode. For contracts under the EPC model, the government releases the entire payment as and when a builder achieves the project milestones during construction. In the case of projects under the HAM mode, government agencies pay only 40 per cent of the cost during construction in five equal instalments. The remaining amount is released in 30 biannual instalments, which commences six months after the project is completed. As per a circular released by MoRTH on the norms relaxed, contractors availing this advance payment will have to pay the interest when the final payment is released, once the set milestone is achieved. For instance, NHAI or any other road owning agency can give the interest bearing working capital advance to the road builder even if it has completed only 5 km of a highway stretch against the set milestone of 10 km for release of payment.

Next Story
Infrastructure Transport

HMRTC to Extend Metro from Gurugram to Jhajjar

The Haryana Mass Rapid Transport Corporation (HMRTC) is progressing with plans to extend the Gurugram Metro from Basai to Bhadsa in Jhajjar, with the ridership survey expected to be completed by the end of January, according to HMRTC officials. In March, the authority had requested Railway India Technical and Engineering Services (RITES) to conduct a ridership survey, which will play a crucial role in finalising the project. The proposed route, covering 23.1 km from Basai to Bhadsa, will alleviate heavy traffic on this stretch. The ridership survey will determine whether the extension should p..

Next Story
Building Material

Siam Cement BigBloc Construction bags Tata Project’s order

SIAM Cement BigBloc Construction Technologies, a joint venture between Gujarat based BigBloc Construction and Thailand’s SCG International Corporation, has secured a work order from Tata Projects for supply and installation of AAC Panels for India’s first Semiconductor unit of Micron India in Sanand, Gujarat. The work order of approx. 2 lakh square feet is for supply and installation of 100 mm AAC panels for Micron India’s semiconductor factory at Sanand. The work order was finalized after several rounds of meetings, thorough due diligence, and factory visits, including review of mock-u..

Next Story
Infrastructure Urban

Zoomlion Releases World's Tallest Straight Boom Aerial Work Platform

Zoomlion Heavy Industry Science & Technology has released a series of groundbreaking aerial work platform (AWP) products, including the world's tallest straight boom aerial work platform, the ZT82J, with a height of 82.3 m. These innovative products further solidify Zoomlion's leadership in the AWP sector and underscore its commitment to global market development. The ZT82J marks Zoomlion's third instance of setting a world record in straight boom AWP following the 68-meter and 72-meter products. The 82.3-meter AWP boasts a platform amplitude of 34.1 meters, a maximum working load of 454 kilog..

Hi There!

"Now get regular updates from CW Magazine on WhatsApp!

Join the CW WhatsApp channel for the latest news, industry events, expert insights, and project updates from the construction and infrastructure industry.

Click the link below to join"

+91 81086 03000