So far, NHAI has received 164 Insurance surety bonds consisting of 20 bonds for performance security and 144 bonds for bid securities for implementing its projects
New Delhi:
After initial hitches, some of the domestic general insurers including New India Assurance, Bajaj Allianz General Insurance and SBI General Insurance and others have already issued around 700 insurance surety bonds valued at around Rs 3,000 crores in recent months.
So far, National Highway Authority(NHAI) has received 164 Insurance surety bonds consisting of 20 bonds for performance security and 144 bonds for bid securities for implementing its projects.
NHAI had organised workshop on Implementation of insurance surety bonds in national highway contracts.
Recognizing the potential of surety bonds, various panelists during the workshop advocated for a wider adoption of the financial instrument for awarding of NHAI contracts. The workshop also outlined various challenges and deliberated on possible measures that can be taken for faster adoption of the instrument.
Insurance Surety Bonds is a financial instrument, where insurance companies act as ‘Surety’ and provides the financial guarantee that the contractor will fulfil its obligation as per the agreed terms.
Wider adoption of such instruments will help to strengthen infrastructure development in the country, said experts.
The government has made Insurance surety bonds at par with bank guarantees for all government procurements and NHAI has been urging insurance companies and contractors to use insurance surety bonds as an additional mode of submitting bid security and /or performance security.
The workshop was addressed by Rajendra Kumar, member (Finance) NHAI; A. K. Singh,chief general manger,(Finance) NHAI, N. B. Sathe, advisor, NHAI; and . Mandakini Balodhi, director, Department of Financial Services.
NHAI workshop was attended by representatives from various central government ministries & departments, insurance companies, Highway Operators Association of India (HOAI) and National Highways Builders Federation (NHBF).