In a big boost to infrastructure companies, NITI Aayog is preparing a Cabinet note for infra related ministries — road transport, urban development, petroleum — to ease arbitration norms and release stalled payments of infra companies. This comes amid reports that about Rs 1.65 lakh crore of banks' Rs 3.65 lakh crore exposure to the construction sector is stressed. CNBC-TV18 learns that the new arbitration law note will address norms on disputes that lead to delay in project payments. Project delays are largely due to reasons like environment clearance and land acquisition. If arbitration award favours the concerned company, the government should pay up and in cases of unanimous award, no appeal should be made further. The committee will develop a mechanism to appeal so that there is no finger pointing later -- an appeal can only be made if a panel of one secretary of the concerned ministry, comptroller and auditor general (CAG) and central vigilance commission (CVC) members give a go-ahead. These laws are applicable to stalled payments of more than Rs 50 crore and will speed up the payments coming to the industry. Arbitration troubles have been a teething problem for the industry, said KK Mohanty, MD, Gammon Infra. Speaking to CNBC-TV18, he said the move will improve liquidity position for the industry. The company, Mohanty added, has half a dozen stuck projects and has stalled claims worth Rs 1500 crore. In a level meet at Prime Minister’s Office (PMO), officials of the finance, power and road ministries along with National Highway Authority of India (NHAI) met NITI Aayog CEO Amitabh Kant to discuss the issues concerning infrastructure companies. The meet was also attended by bankers and representatives of infrastructure heavy weights like HCC, L&T, etc.
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