If funding to the road developers slows down further, the Union government is likely to bid out more projects through engineering, procurement and construction (EPC) route instead of the hybrid annuity model that is being used at present.
Under the EPC model, the financial risk is significantly less for the private players as the government funds the project and provides regulatory clearances.
The private firms execute the project either directly or by subcontracting and have to complete the work within a given timeline. Nitin Gadkari, minister of road transport and highways said that the lending towards HAM projects is slowing down.
“It is one of the problems we are facing.”
DNA Money had earlier reported that road developers are increasingly facing challenges in getting their projects financed as banks are saddled with a high number of non-performing assets.