NEWS – NHAI Accepts First Insurance Surety Bond as Bid Security

ALL YOU HAVE TO KNOW

What is an Insurance Surety Bond

• Instrument where insurance companies act as ‘Surety’ and provides the financial guarantee that the contractor will fulfil its obligation as per the agreed terms
• Ministry of Finance, Government of India has made e-BG and Insurance Surety Bonds at par with Bank Guarantees for all Government procurements

Benefit: Instruments like Insurance Surety Bonds will help to strengthen National Highway Infrastructure development, which has cascading positive impact on Indian economy

Other highlights

• For what is the bond accepted: monetization program of the upcoming bid of Toll Operate Transfer (TOT) Bundle 14 @ 0.25% by the insurer without any margin money
• Who are involved: NHAI, Highway Operators Association of India (HOAI), SBI General Insurance and AON India Insurance
• This will translate into big saving for Concessionaires, which will further enhance liquidity in the market, thereby fostering an environment conducive to the growth and development of the road sector
• Issuance of Insurance Surety Bond will set a new benchmark for the industry, highlighting the importance of innovative financial solutions in the evolving landscape of road infrastructure development. It will encourage private participation in the highway sector and will be a significant step towards facilitating ‘Ease of Doing Business’

NATIONAL HIGHWAYS AUTHORITY OF INDIA

• Autonomous agency of the Government of India
• Responsible for the development, maintenance, and management of national highways in the country
• Established in 1988 and operates under the Ministry of Road Transport and Highways