Mumbai, (IANS) Lauding the Union cabinet’s approval of measures to revive the construction sector, Reliance Infrastructure (Rel-Infra) on Friday said it has won arbitration awards for two road projects and was awaiting arbitration on various projects worth Rs 14,000 crore.
“This landmark initiative by Cabinet Committee on Economic Affairs (CCEA) will boost the stressed infrastructure sector and also help infuse much required liquidity in the system,” Rel-Infra CEO Lalit Jalan said in a statement here.
“Reliance Infrastructure has already won arbitration awards for two road projects of Rs 170 crore,” the statement said.
“In addition, over Rs 14,000 crore are under advanced stages of arbitration for various projects,” it added.
CCEA on Wednesday approved new norms for the construction sector to ensure quicker resolution of disputes, resume stalled projects and make access to financing easier.
The measures approved include circulation of a model draft for turnkey projects, release of 75 per cent of money earmarked for infrastructure companies towards completion of existing projects, and coverage of disputes between companies and civic bodies under a new arbitration law.
The 75 per cent of the arbitral award amount owed by government agencies will be deposited into an escrow account, which can be used to repay bank loans or to meet commitments in ongoing projects.
The cabinet communique said that in case of claims where the government agency has challenged the arbitral award, 75 per cent of the award amount may be paid by the state-run unit to the “contractor/concessionaire against margin free bank guarantee”.
“The move will ensure that projects are not stranded due to long arbitration disputes between concessionaire/contractor and government agencies and lack of funds,” Rel-Infra said.
CCEA also said that a report commissioned by the Confederation of Indian Industry indicates that pending claims from government bodies are a key factor behind the burgeoning debt of construction companies, accounting for 150 per cent of the debt.
“Over 85 per cent of the claims raised against government bodies are still pending of which 11 per cent is pending with the Government agencies, 64 per cent with arbitrators and 8.5 per cent with courts,” the CCEA added.