The National Highways Authority of India(NHAI), under the ministry of road transport and highways, on Wednesday said it has so far received 164 insurance surety bonds (ISB) consisting of 20 bonds for performance security and 144 bonds for bid securities.
“Around 700 insurance surety bonds valued at around Rs 3,000 crore have been issued by different insurance companies so far,” NHAI said in a statement issued after a day-long workshop on implementation of insurance surety bonds (ISB) for NHAI contracts.The workshop was organised to review the progress made in implementation of Insurance Surety Bonds and encourage participation from the stakeholders for wider adoption of the instrument.
Representatives from various central government ministries and departments, insurance companies, Highway Operators Association of India (HOAI) and National Highways Builders Federation (NHBF) attended the workshop which was addressed by members of NHAI.
The finance ministry 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 this instrument as an additional mode of submitting bid security or performance security.
“Recognizing the potential of ISB, the panelists advocated for a wider adoption of the financial instrument for awarding of NHAI contracts while outlining various challenges and deliberating on possible measures that can be taken for faster adoption of the instrument,” NHAI said.
Insurance surety bonds is a financial instrument, where insurance companies act as ‘Surety’ and provide the financial guarantee that the contractor will fulfill its obligation as per the agreed terms.
NHAI is of the view that wider adoption of such instruments will help to strengthen infrastructure development in the country.
