NEW DELHI: The road transport and highways ministry has relaxed norms to release partial payment to highway builders for the work they have carried out even if they fail to achieve the construction milestone set by the authorities. This working capital advance by NHAI or any other road owning agency is aimed at improving liquidity of builders and to help them complete stuck projects hurt by a funds crunch.
According to a circular issued by the ministry, the contractors availing such advance payment will have to pay the interest when final payment is released once they achieve the milestone. To give an example, NHAI can give the interest bearing working capital advance to a contractor even if it has completed only 5km of a highway stretch against the set milestone of 10km for release of payment.
"In order to revive the projects facing cash flow crisis, this provision has been made for extending the payment facility against unbilled executed work. This provision was not there. The released amount shall be chargeable with interest @ bank rate plus 3% per annum on reducing balance basis. It shall be adjusted in subsequent milestone based release of payment," a government official said.
The facility will be extRead More – Source
