NHAI to pay only Rs 175-200 cr as it takes over from concessionaire
Lenders to the Delhi-Gurgaon Expressway, a showcase public-private partnership (PPP) road project, might be forced to take a haircut of more than Rs 1,400 crore (Rs 14 billion) when the government takes over from DS Construction, the concessionaire. The National Highways Authority of India (NHAI) has informed a consortium of banks, led by IDFC Bank, that the authority would pay the lenders only Rs 175-200 crore (Rs 1.75-2 billion) if it takes over.
The consortium, which includes Punjab National Bank, Oriental Bank of Commerce and State Bank of Bikaner and Jaipur, besides IDFC, has an exposure of combined Rs 1,600 crore (Rs 16 billion) in the project. The decision would mean a hit of Rs 1,400 crore or more, said a government official. “IDFC-led consortium has agreed to the terms,” he confirmed.
NHAI had terminated the contract awarded to DS Construction earlier this year but the matter is sub judice at present, as the concessionaire had got a stay on the order from the Delhi high court. “The consortium is entitled to only Rs 175-200 crore according to the termination agreement. We have clearly told it about the decision. IDFC Bank, the lead lender has an exposure of close to Rs 500 crore (Rs 5 billion). It is followed by PNB (less than Rs 400 crore),” a senior NHAI official told Business Standard, asking not to be named as the matter was sub judice. An IDFC Bank spokesperson refused to comment.
The contract had been terminated after frequent complaints of inordinate delays at the toll plaza. NHAI had also found irregularities in the manner in which DS Construction raised loans from financial institutions without the authority’s permission.
The road transport & highways ministry and NHAI are also learnt to sought the attorney-general’s help in vacating the stay so that the project could be taken over at the earliest. NHAI had earlier backed a proposal to allow IDFC Bank to buy 74 per cent of the project’s equity from the concessionaire but the bank was not keen.
The government’s decision to take over followed this. TheDelhi-Gurgaon Expressway was considered a landmark project, as it was the first time the government had received a premium from the operator, and did not have to pay anything for construction. NHAI had awarded the build-operate-transfer (BOT) project to Jaypee DSC Ltd in 2002 but Jaypee Group exited the project in 2004.
|A block down the road
|2002: Jaypee DSC Ventures bags the 28-km-long Delhi-Gurgaon Expressway project
2004: Jaypee Group exits the project, leaving DSC as the only operator
2008: Construction completed and tolling begins
Sep 2009: Parliament committee observes the contract terms were not being complied with, asks NHAI why the contract was not terminated
Sep 2011: A highways ministry investigation finds financial irregularities; NHAI is asked to take legal action against the developer
Dec 2011: NHAI issues preliminary termination notice; developer challenges the order in Delhi HC
Feb 2012: NHAI issues contract-termination notice after HC order; NHAI and the private concessionaire inform the HC later they have agreed to work out an out-of-court solution
Sep 2012: In a separate case against congestion on 32-lane toll plaza, Punjab & Haryana High Court restrains tolling for 15 days; Supreme Court refuses to stay the decision
Mar 2013: NHAI issues a notice to reply within 15 days why the contract should not be terminated; DSC challenges notice in Delhi HC and gets a stay on the decision
Sep 2013: Ministry set to to ask Attorney General to help vacate the stay