Government may offer to bail out highway projects of IL&FS
Government sources, however, indicated that the special package for IL&FS could be a one-time measure since the company has now been taken over by the government.
An option being discussed is to appoint an independent engineer for each stuck project to assess the physical progress and, based on the work completed, a payout would be given by the government to enable IL&FS to exit, sources told TOI.
While this will help the company, which is battling multiple repayment defaults, it will increase the headache for the government agencies, including National Highways Authority of India, which will have to bid out the incomplete projects. Sources said IL&FS has about 17 NH projects, including the completed ones. Only six are under construction.
In case of the Rs 3,500-crore Z-Morh tunnel project in J&K, for instance, nearly 40% of the work has been completed. IL&FS may be able to recover Rs 1,400 crore from the project, if this proposal for settlement gets the go-ahead.
Another option under consideration is to get lenders in projects executed under public-private partnership (PPP) to replace IL&FS as the concessionaire to help bankers get back their money by completing the projects. And, bailout could be offered for the government-funded ones. At the same time, the government is also looking at ways, including an out-of-court settlement, with the rider that no claims will be entertained later. Currently, arbitration is going on for three NH projects, involving around Rs 1,400 crore.
All put together, IL&FS Group's claims related to the NH sector are estimated at about Rs 10,000 crore.
Government sources, however, indicated that the special package for IL&FS could be a one-time measure since the company has now been taken over by the government. This may require an approval from the cabinet.