NITI Ayog has given the SOP (Standard Operating Procedures) for release of payment for timely implementation. HCC has been asked to reconcile the award amount within 7 days and thereafter open escrow account and submit bank guarantees (BGs) within 30 days for recovering the amount. This communication clears the way for HCC for receiving close to Rs 2000 crore within 4 to 6 weeks.
The communication came in the backdrop of the Government setting into motion the process to release 75 percent of arbitration amounts against margin free guarantee in situations where awards have been given but have been contested by the concerned authorities.
The cabinet committee on economic affairs chaired by the Prime Minister in September 2016 has cleared several measures proposed by the Niti Aayog to revive the construction sector such as easier norms for faster settlement of disputes between contractors and government departments, and partial deposit of funds by government agencies in form of arbitration awards.
HCC has arbitration awards for Rs 3,427 crore as of September 30, 2016. Further claims worth around Rs 4,173 crore are in arbitration process. About 70% of these cases were at the initial stage of arbitration process and the company has already given consent to transfer these cases under new arbitration act, which mandates decision within 12 months.