Summary: The recent circular published by the Ministry of Road Transport & Highways in respect of dispute resolution process under the EPC, BoT and HAM projects, marks a significant policy shift with clear and direct implications for road developers and investors in the infrastructure sector developing road projects.Continue Reading NHAI’s Move to End Arbitration for Major Disputes: Reform or Reversal?
Summary: This article introduces India’s first national geothermal energy policy, marking a strategic leap in diversifying renewable energy sources. The policy adds immense value by unlocking geothermal’s potential for power, heating, cooling, and industrial use, with support from global standards, fiscal incentives, and oil-gas sector synergies.Continue Reading Turning Up The Heat: India’s First National Geothermal Energy Policy Unveiled
Semiconductors play a crucial role in modern technology, from enabling cell phones, to electric vehicles, to defence equipment and medical devices. The rising need for Internet of Things (IoT), AI integration, data and wireless communication has sparked increased demand for semiconductors worldwide, the market for which is expected to exceed $1 trillion by 2030 globally. India is taking strategic steps to become a major player in the semiconductor sector and has introduced ambitious schemes and incentive programmes to draw investment into semiconductor manufacturing in India. This article briefly discusses India’s semiconductor policy landscape and explores key considerations in setting up of semiconductor fabs in India.Continue Reading Semiconductor Revolution: Setting up Semiconductor fabs in India
The Micro Small and Medium Enterprises (MSMEs) sector plays a crucial role in enhancing and ensuring India’s socio-economic development. The sector has gained significant importance due to its contribution to the country’s Gross Domestic Product (GDP) and exports.[1] A survey by International Labour Organisation indicates that MSMEs account for more than 70% of global employment and 50% of GDP[2].Continue Reading The Curious Case of Co- Lending Model
Cost and time overruns have long since plagued India’s infrastructure sector and given a bad name to public projects being executed in the country. According to a report[1] published by the Ministry of Statistics and Programme Implementation, as on November 1, 2021, 438 out of 1,681 central sector infrastructure projects have been affected by cost overruns, aggregating to Rs 4.34 lakh crore, and 539 projects are running behind their respective schedules. Such delays take a toll on the viability of projects. To mitigate this problem, the Central Vigilance Commission (“CVC”), Comptroller and Auditor General of India and NITI Aayog have long-advocated the need to revamp the procurement and project management procedures in India. The efforts of these premier institutions have culminated in the Ministry of Finance issuing the General Instructions on Procurement and Project Management on October 29, 2021 (“General Instructions”). By introducing provisions pertaining to additional methods of procurement, timely payment to contractors and reforms in the dispute resolution process, the General Instructions attempt to overhaul the manner in which projects are awarded and implemented by public authorities and project executing agencies (“PEA”).
Continue Reading Ushering a New Wave of Reforms in Public Procurement and Project Management
In continuance of various measures to resolve the pile of non-performing assets (NPAs) in the financial sector, the Reserve Bank of India (RBI) has now turned its focus on the role and framework of Asset Reconstruction Companies (ARCs) in being an important part of the solution. Even though the ARCs were in the game since enactment of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI”), their performance has been sub-optimal and the recovery percentage abysmally low.[1]Continue Reading Overhaul of the ARC Framework – Need of the hour
Power purchase agreements (PPAs) are generally long-term contracts that are vulnerable to legislative or judicial interventions. These interventions have the potential to impact the cost of establishing or operating generation plants over the life of the PPA. In order to address this risk, PPAs (and many other long-term contracts) incorporate a provision for ‘Change in Law’, which seeks to provide a mechanism to compensate the affected party for increase in cost or decrease in revenues, occasioned by changes in rules/ regulations governing the setting up and operation of the generation plant.Continue Reading Recovery of Change in Law Impact – An Overdue Intervention
The premise of project financing lies in financing of infrastructure projects undertaken by a special purpose vehicle (“Borrower”), the repayment of which is broadly dependent on the cash flows generated by the projects itself rather than the balance sheet of the Borrower or its promoter/sponsor. The onset of public private partnership (“PPP”) regime in the project financing space in India has been instrumental in implementation of multiple commercially viable projects. The PPP projects are projects based on a contract or concession agreement, between Government or statutory entity on one side and a private sector company on the other side, delivering public utility infrastructure services which can be availed on payment of user charges. It provides an opportunity for private sector participation in financing, designing, construction, operation and maintenance of public sector programme and projects. The licence to develop such projects is given by the statutory authority in various models like build, operate, transfer (BOT), build, develop, operate and transfer (BDOT), build, own, operate and transfer (BOOT) and toll, operate and transfer (TOT). In most cases, PPPs combine the best of both worlds: the private sector with its resources, management skills and technology and the public sector with its regulatory actions and protection of public interest[1].
Continue Reading Rapid Metro Judgment: Reinforcing the Sanctity of Contracts and Public Good
The Covid-19 pandemic has affected the society in an unanticipated and unprecedented way. To contain its spread, the Ministry of Home Affairs (MHA), Government of India vide its order dated March 24, 2020 directed closure of commercial and private establishments for a period of twenty one days. Immediately thereafter, the Ministry of Road Transport & Highways (MoRTH) issued an order dated March 25, 2020 directing the National Highways Authority of India (NHAI) to take action as per the said MHA order (including suspension of tolling operations on the toll plazas) and added that prevailing condition may be treated as ‘force majeure’ under the concession agreements executed by NHAI with the developers.
MoRTH thereafter directed NHAI to resume toll collections from April 20, 2020. However, the suspension of toll operations until April 20, 2020, the lockdown period thereafter and the steep fall of the traffic plying on the national highways, has significantly impacted the entire transportation industry, exposing developers to high risk and financial distress with no visibility of normalcy in the near future.Continue Reading Covid-19: Bumpy roads ahead for Highway Sector
After more than three months of lockdown, there is no denying that the Indian economy has been impacted. This is also evidenced by the stimulus packages announced by the Government of India, in an attempt to protect and revive the economy. With most people staying indoors 24*7, electricity consumption in the commercial sector was also impacted initially, although the levels have been restored in a phased manner. This coupled with different lockdown strategies in different states, is also continuing to impact business at large. Taking into account the impact of COVID-19 across the globe, and the lockdown in the country, the government of India and certain central agencies have been providing clarification and issuing memorandums/notifications to guide the infrastructure industry, specifically the renewable energy (RE) sector, and RE projects in terms of COVID-19 being declared as a force majeure (FM).Continue Reading COVID-19 Cloud Cover: Not so sunny times for renewable energy sector!