The National Highways Authority of India (NHAI) plans to release Rs 6,000 crore to developers stuck in litigation under the guidelines announced at the end of last month. The move will help banks recover some stuck loans while also providing funds for stalled projects. A total of Rs 70,000 crore in various sectors is stuck under arbitration. The government has asked its departments and ministries along with public sector entities to release 75% of disputed amount where the developer or concessionaire has won an arbitration case. Niti Aayog, which piloted the policy, has written to ministries and departments to act on the decision quickly. At present, 123 dispute cases worth Rs 25,000 crore are pending with NHAI, including cases worth Rs 13,000 crore awarded in favour of private parties. Hindustan Construction Company (HCC), which has already been awarded claims worth Rs 3,400 crore against various government departments, has sought release of Rs 1,000 crore from NHAI. Under the new guidelines cleared by the Cabinet Committee on Economic Affairs, government agencies will pay 75% of the arbitral award amount to an escrow account against margin-free bank guarantee. The escrow account can be used to repay loans or to meet commitments in ongoing projects.
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