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Even though the Ministry of Road Transport and Highways has declared COVID-19 as a force majeure event and informed National Highways Authority of India (NHAI) accordingly on March 25, NHAI has not issued a similar notification, leading to confusion at the ground level.
This has resulted in local field officers and independent engineers acting according to their discretion, to the extent of rejecting COVID-19 as a force majeure event in certain cases, according to the National Highway Builders Federation (NHBF).
The force majeure clause in a contract provides temporary reprieve to a party from performing its obligations upon occurrence of a force majeure event. This typically includes war, terrorism, earthquakes, hurricanes, acts of government, explosions, fire, plagues or epidemics or a list of events as agreed by both parties.
Rejection of COVID-19 as force majeure event has serious implications on the rights available to highway builders under the concession or contract agreement and may further affect the projects.
Even though the Ministry of Road Transport and Highways has declared COVID-19 as a force majeure event and informed National Highways Authority of India (NHAI) accordingly on March 25, NHAI has not issued a similar notification, leading to confusion at the ground level.
This has resulted in local field officers and independent engineers acting according to their discretion, to the extent of rejecting COVID-19 as a force majeure event in certain cases, according to the National Highway Builders Federation (NHBF).
The force majeure clause in a contract provides temporary reprieve to a party from performing its obligations upon occurrence of a force majeure event. This typically includes war, terrorism, earthquakes, hurricanes, acts of government, explosions, fire, plagues or epidemics or a list of events as agreed by both parties.
Rejection of COVID-19 as force majeure event has serious implications on the rights available to highway builders under the concession or contract agreement and may further affect the projects.
For the BOT Toll and TOT projects, under force majeure event, the revenue loss is compensated in the form of extension in concession period.
In addition, 100 per cent of operations and maintenance (O&M) and interest costs are reimbursed for the BOT Toll projects for the affected period. This would amount to 50-55 per cent of loss of revenue incurred by these projects.
For projects that are public-funded (currently being tolled by NHAI through toll contractors), the suspension would result in a direct revenue loss for NHAI.