Insurance companies have issued around 700 insurance guarantees worth around ₹3,000 crore after the Center made the facility available on par with bank guarantees for all government procurement.
The details were shared by officials during a workshop on implementation of insurance guarantees in national highway contracts, organized by the National Highways Authority of India in Novel Delhi.
NHAI received 164 insurance sureties, including 20 as security for proper performance of the contract and 144 as tender security. Contractors are invited to utilize deposits as an additional means of securing the offer and/or securing proper performance, the Ministry of Road Transport and Highways said in a statement on Wednesday.
Insurance surety bonds are a financial instrument in which insurance companies act as a “guarantor” and provide a financial guarantee that the contractor will fulfill the obligation in accordance with the agreed terms. Wider adoption of such instruments will aid strengthen infrastructure development in the country, the ministry said.
In November 2023, NHAI announced that it has accepted insurance bonding for the first time as part of its monetization program for its upcoming Toll Operate Transfer (TOT) package offering. “This will be the first case of using this groundbreaking instrument as a bank guarantee in the road infrastructure sector in order to monetize offers,” it was stated.
