Road construction stocks like IRB Infra and Jaiprakash Associates witnessed good demand today after Finance Minister P. Chidambaram proposed setting up of a regulatory authority for the road sector.
IRB Infra Developers surged 2.42 per cent to Rs 120.70, while Jaiprakash Associates gained 2.29 per cent to Rs 73.85.
Shares of engineering giant
To address the financial stress, construction risk and contract management in the road sector, the Government today said that it would set up a road regulatory authority in 2013-14.
“Challenges not envisaged earlier including, financial stress, enhanced construction risk and contract management issues, are best addressed by an independent authority...hence the government has decided to constitute a regulatory authority for the road sector,” Chidambaram said while announcing the Budget.
This move may also be linked to the recent trend of some private companies exiting projects on account of delay in various clearances. At present, the National Highways Authority of India along with the Road Ministry awards projects.
The key functions of the regulator are likely to include tariff setting, regulation of service quality, assessment of concessionaire claims, collection and dissemination of sector information, service-level benchmarks and monitoring the compliance of concession agreements.