Guwahati: In a bid to increase liquidity and capacity of bidders, the National Highways Authority of India (NHAI) accepted its first insurance surety bond as bid security for the Toll Operate Transfer (TOT) Bundle 14.
The NHAI in a release stated that, this will be the first time this innovative instrument is being utilized as a Bank Guarantee (BG) in the road infrastructure sector for monetization of bids.
Insurance surety bonds are instruments where insurance companies act as surety and provide the financial guarantee that the contractor will fulfil its obligation as per the agreed terms.
NHAI said that they have urged insurance companies and contractors to consider insurance surety bonds as an additional method for submitting bid security and performance security deposit.
The NHAI expects these bonds to be cost-effective and provide substantial security for NHAI projects. The Ministry of Road Transport and Highways (MoRTH) has allowed acceptance of e-bank guarantee and insurance surety bonds as "bid security" and "performance security" in standard documents of engineering, procurement, and construction (EPC), hybrid annuity model (HAM) and BOT (Toll) projects.
According to the statement, NHAI has been working closely with Highway Operators Association of India (HOAI), SBI General Insurance and AON India Insurance to implement this initiative insurance surety bond has been issued for NHAI monetization bid of TOT bundle 14 @ 0.25% by the insurer without any margin money," the statement said.
This will translate into big savings for concessionaires, which will further enhance liquidity in the market. It will encourage private participation in the highway sector and will be a significant step towards facilitating Ease of Doing Business, NHAI added.
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