Insurance Surety Bond

News Excerpt

NHAI Accepts First Insurance Surety Bond as Bid Security for NHAI TOT Bid for Monetization.

More details on News

  • To boost liquidity and capacity of bidders, NHAI has accepted Insurance Surety Bond for the monetization program of the upcoming bid of Toll Operate Transfer (TOT) Bundle 14.
  • 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 Bond has been issued for NHAI monetization bid of TOT bundle 14 @ 0.25% by the insurer without any margin money. 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’.

About Insurance Surety Bonds

  • Insurance Surety Bonds are instruments where insurance companies act as ‘Surety’ and provides the financial guarantee that the contractor will fulfill 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.
  • Instruments like Insurance Surety Bonds will help to strengthen National Highway Infrastructure development, which has cascading positive impact on Indian economy.

Toll Operate Transfer (TOT)

  • TOT model has been developed to encourage private participation in Highway sector.
  • NHAI from time to time, has awarded contracts for tolling, operation and maintenance of various National Highway stretches on Toll Operate Transfer (TOT) basis.

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