(Road Ministry’s proposal, to be taken up by the CCEA, suggests that companies can pay less premium in initial 2-3 years and the remaining amount in subsequent years.)
NEW DELHI: The government is likely to consider a proposal on Friday for restructuring of premium payment for companies building highway projects.At present, companies pay some amount of premium to the government in the first year of the project which keeps on increasing in the subsequent years.
According to sources, the Road Ministry’s proposal, which would be taken up by the Cabinet Committee on Economic Affairs, suggests that companies can pay less premium in initial 2-3 years and the remaining amount in subsequent years.
There will be no change in the value of the premium but companies can pay lesser amount initially, which is like a breather for the firms, sources said.
The Cabinet note for the proposal was circulated by the Ministry of Road Transport and Highways last month.
The move was proposed against the backdrop of some private infratstructure firms pulling out of road projects due to delays in regulatory clearances like land acquisition and environment clearances.
These problems had delayed the projects and affected the companies’ financials.
Earlier this year some private companies even terminated their contracts with the National Highways Authority of India ( NHAI) citing these reasons.
Therefore, in order to relieve the companies facing financial stress the Road Ministry proposed the idea of recasting the premium payment of the projects.
The ministry is also believed to have suggested that the restructured premium for any year should not be lower than the toll collected by the developer for that year and the developer cannot pull out from the project till all dues to the government are paid.
A projects review earlier this month revealed that the NHAI is yet to resolve technical and other parameters in the Supreme Court-mandated expressways.
NEW DELHI: The government plans to set up a panel to track execution of expressways, after the highways authority’s blueprints and groundwork for three projects put on the fast track by the Prime Minister’s Office in July were found lacking in multiple aspects.A projects review earlier this month revealed that the National Highways Authority of India (NHAI) is yet to resolve technical and other parameters in the Supreme Court-mandated Eastern Peripheral Expressway and the Delhi-Meerut and Mumbai Vadodara expressways.
The government has now decided to form a committee comprising senior officials from the highways ministry, department of expenditure and the Planning Commission to track the Authority’s progress, said people with knowledge of the development. The committee will meet periodically, beginning this Saturday, and their observations will be reviewed by the PMO.
“The committee will hold periodic meetings to review the progress being made in implementing the expressway projects by the vertical set up under the NHAI last month for this purpose,” an official said.
According to the project review, the earthwork required to build a pass, or right-of-way, for the 135-km Eastern Peripheral Expressway (EPE), may not even be available in the vicinity. It will now be necessary to re-examine the design and its cost implications.
The EPE, mandated by the top court eight years ago, is meant to handle heavy trucks and non-Delhi bound vehicles. The NHAI has already missed the August deadline for request for quotation for this job.
An official said that while the deadlines set by the PMO may be difficult to meet, its directive has brought to the fore the tardy progress made even the most basic legwork for these expressways.
Similarly problems plague the 125-km Delhi-Meerut expressway, where changes in the scope of the project would be required, which in turn would necessitate a modified proposal to be sent to the Public Private Partnership Appraisal Committee. A decision is yet to be taken on how the utilities would be shifted—a must before any road can be built. The NHAI has been given a week to resolve this issue.
Kerala is at it again. The state is seeking ways to downsize the width of the National Highway network under its footprint, from 45 metres to 30 metres even as progressive states have made clear their intention to go by the international benchmark of 60 metres. Such an unreasonable posturing comes at time when the state leads the nation with 13 daily deaths from road accidents, most of them on narrow roads, from head-on collisions. The opposition to wide roads comes largely from a few lobbies of powerful land sharks who have built commercial complexes along narrow roadsides in the thriving business hubs of Malappuram and other northern districts. The state government is so much like a toy in their hands that serious discussion is under way on building sky roads along such stretches where it upsets the high and mighty if the roads get widened.
Ideally, the need to widen and straighten its narrow, serpentine roads should have been flagged by the state itself, considering the gigantic growth of its vehicle population in recent years. The journey from 1,94,567 vehicles in 1980-81 to 60,72,019 in 2010-11 has come at a breakneck speed, with the last year alone adding another 8,21,295 vehicles. Consider the vital statistics: Eight national highways in the state cover a length of 1,524km or only 2.3 per cent of the total national highway network in the country. Even as road accidents numbered 37,072 in 2000, causing 2,710 deaths and leaving 49,403 injured, in 2012 the accidents remained rooted at 36,174 but the number of deaths climbed to 4,286, showcasing what real damage head-on collisions by speeding vehicles on narrow and winding roads can do.
In other words, the state roads have witnessed close to 40,000 deaths and left four lakh injured, many of them maimed for life — a fact that should have shaken the state government into seeking its own ways and means of widening, straightening its roads.
It is in this context that one has to see the latest in a string of hugely parochial demands put forth by the state in a seemingly endless endeavour to set its own standards. It is a given that such demands keep cropping up on occasions that warrant definition of acceptable standards, whether it be for setting up industrial units or going in for infrastructure projects. In essence, no industry is allowed to set base in the state because of heightened pollution fears, though the average Keralite has no qualms about availing benefits of such industries set up in neighbouring states. The mindset holds good in the case of saying no to thermal power projects or large manufacturing hubs that will essentially have as a spin-off, a degree of environmental pollution. Kerala, therefore, has chosen to be a consumer state, leaving it to the other states the little matter of production — whether it be for foodgrain, vegetables, fruits or the many automobiles that it buys in large numbers, the narrow roads notwithstanding.
It is by no means a logical corollary to this thought process, but many Keralites also think it but natural to give a thumbs down when asked to pay toll while motoring through well-carpeted stretches of national highway. Strangely, this does not seem to bother any Keralite once he crosses the border, with many waxing eloquent in an incredulous tone on the rather heavy toll he’s required to pay during a drive to Goa and back. But once he hits the home road, it is all cursing and swearing each time he catches the sight of a toll gate.
Cynics often argue that the bane of Kerala has been its high dose of literacy and the cultural chip-on-the-shoulder many seem to carry while going about their daily business. While these are debatable points, there is no denying the negative impact that the non-resident Keralite (NRK) has had on their kith and kin, as much is persuading them to lead a life of no toil as in making a whole community believe an NRK is so special that an NRI pales into insignificance when faced with the homegrown repatriate. Thus, you have a whole department at the state government-level playing fiddle to the whims of the NRK community, you have the NRK deposits rated at an overwhelming percentage of Kerala’s GDP and of course a real estate sector and a gold jewellery business that catches flu of the highest virulence each time the NRK sneezes.
Therefore, it should have come as no surprise when the state government, led by an unusually belligerent chief minister, pitched wholeheartedly to get airborne an idea that has remained grounded nevertheless. The concept of Air Kerala was thus borne. The purpose — to fly in and fly out all those NRKs, who keep getting annoyed periodically at the highhanded treatment meted out to them by the national flier, Air India, and its country cousin, Air India Express.
Such has been the animosity generated among the NRKs against Air India Express that its management is actively thinking of shifting its headquarters from Kochi to Mumbai or any other location where the chances of Keralites behaving in a normal manner are significantly on the high side.
Even as its airy ideas remain grounded, Kerala refuses to take a serious look at down-to-earth solutions to its daily problems. It continues to turn a Nelson’s eye to passing a law against the stopping of government buses at major curves on its winding roads, said to be one of the causes for major accidents and something that it can set right at no cost to the exchequer. True, such a path-breaking decision can come only if it volunteers to undertake a great re-engineering exercise — one of its mindset. Having said that, it is time the people of the state began taking ownership for many of the woes that have befallen it and stop blaming others, stop looking for unrealistic solutions.
Getting a move on, the first step could be to stop calling hartals at the drop of an umbrella. Because, this stoppage of normal working days has no immediate history of having set anything right, since realistically none of the recent hartals are a throwback on those from the freedom struggle days. If that were the case and the goal behind the hartal a noble one, we would have had at least one hartal calling for widening the Kerala roads as per international standards, as a first step towards metamorphosing the girth and elevation of many murderous roads, so that people could safely venture out, confident that they will reach home by the end of the day.
(The writer is resident editor, The New Indian Express, Kerala. E-mail: [email protected])
BANGALORE: The irony of BIA Road is at the far end – Sadahalli gate, where the National Highways Authority of India (NHAI) collects a toll from vehicles returning from the airport. Road users are paying through the nose for a journey on a bumpy road punctuated by gridlocks and littered with construction material.Though there was stiff resistance to the toll, NHAI had its way. The road users’ complaints against the arbitrariness of collecting toll when highway upgradation work is still under way, had few takers. The recent heavy showers have revealed that waterlogging is not only the result of poor drainage but also roadblocks created by the upgradation work, road users allege.
An estimated 1.24 lakh passenger car units (PCU) move towards NH-7. Each time it rains, BIA-bound vehicles run into waterlogging at Minsk Square, where absence of proper drainage and ongoing Metro work turns the road in front of GPO into a huge pool. Thursday was no different.
Motorists ran into another rain-aggravated gridlock at Mehkri Circle flyover that night. The next bottleneck was at Sahakarnagar junction.
“Despite the wide roads after Hebbal flyover, the bottlenecks start from Sahakarnagar junction, where the ramp to the elevated expressway is being constructed. Construction is on at snail’s pace here. Adding to the woes,BWSSB has undertaken drainage work by the roadsides,” said D Nagabhushanam, secretary, Sahakarnagar Residents’ Welfare Association.
Thursday night’s bottlenecks were severe after Kogilu Cross up to the trumpet intersection.
“We had resisted toll collection on a road which is yet to be upgraded. Our protests were silenced by the government. The endless construction work has doubled vehicle maintenance cost, as tyres have to be changed every quarter,” Holla slammed the government.
NHAI officials, on the other hand, maintained absolute silence on the poor drainage and problems created by the ongoing upgradation work. “It’s being done on a ‘develop, build, finance, operate and transfer’ model and the concessionaire (Navayuga Engineering) is facing a fund crisis which is causing the delay,” was all they said.
TIMES VIEW
It’s daylight robbery on NH-7 : the National Highways Authority of India is collecting toll for a road which is yet to be built. That the state government has allowed it is also surprising. Work on the expressway has been going on for months now, the highway is a mess, and so are the drains. For commuters, it must be galling to pay up and then get gridlocked. While all infrastructure projects do inconvenience the public, those responsible for the expressway should realize this is a premium road and go about their work in a more organized manner and ensure the drains and roads are in working condition. Ideally, they should have stuck to their deadline and wound up before the monsoon.
Roads regulator asks bank why it lent concessionaire about double the amount required for Panipat-Jalandhar expressway
Sounding the alarm on lending to road-sector projects, the National Highways Authority of India (NHAI) has sought from State Bank of India (SBI) its reasons for providing to a concessionaire more funding than was required for constructing the 291-km Panipat-Jalandhar expressway.
In its letter to SBI – in what appears to be the first time it has questioned a financial institution over funding – NHAI has sought the reason for extending to concessionaire Soma-Isolux a loan of more than Rs 3,300 crore, an amount double the actual requirement according to the authority.
“We have written to the bank questioning its providing excess funds. We do not usually write to banks but we felt excess money being paid was actually a factor holding back projects. According to our estimate, in this case, the requirement was about half of what was paid,” a senior NHAI official told Business Standard.
NHAI had awarded the project to Soma after the company offered to pay it 20 per cent of the toll collected – the share was to rise by one per cent every year. SBI is the lead banker of a consortium that lent to the project. NHAI had last year terminated the contract with the company following complaints about the highway’s maintenance and toll collection. At present, the concessionaire is contesting the matter in the Supreme Court.
SBI and Soma officials confirmed that SBI had received the letter and sent a reply. “SBI has explained the reasons for providing the funds to Soma. In this case, the time difference between NHAI’s assessment and ours is the reason for the increase in cost estimates,” a senior SBI official said, asking not to be named.
Banks, which often provide funding to concessionaires to undertake projects, have stayed away from the road sector in recent times, as infra projects have been held up due to land acquisition delays. NHAI terminating contracts awarded to concessionaires over toll collection and maintenance complaints has also been a deterrent.
“Banks fund more than is necessary. But when a project is terminated and NHAI takes it back, the compensation it pays is in line with its own estimates. This is why banks have been staying away from funding road projects,” the NHAI official added.
For the Panipat-Jalandhar expressway, NHAI had estimated the cost of the entire project at Rs 2,747.5 crore. But the concessionaire estimated a total cost of Rs 4,518 crore, to be financed by lenders and through equity. The consortium led by SBI provided Rs 3,389 crore for the project, while equity contribution was Rs 623.43 crore. The remaining amount was to be brought in through internal accruals from toll collection.
“NHAI had estimated the cost way back in 2006-07, at the time of preparation of the detailed project report. The cost break-up was not evaluated properly for a project of this magnitude. On the other hand, our cost estimation was done in February 2009. The price of all construction materials had increased steeply during this period. The estimated total cost of Rs 4,518 crore was vetted by the lenders and their consultants before financing the project. The financial model and financing documents were filed with NHAI in early 2009 itself and was accepted without any objections. The regulator had not questioned the total project cost then; it seems to have come as an afterthought,” Soma Vice-President (Highways) P Ramchander Rao said in an emailed response.
Soma has also said that the project was delayed largely because of the failure of NHAI and local authorities in providing encumbrance-free right of way and approvals, as required in the concession agreement. “In spite of these delays, we completed six-laning of 228 of the 291 km, achieving 78 per cent progress. About 20 km of work front is unavailable to the concessionaire due to land acquisition, utilities and design approvals. The project is stuck also because of NHAI’s refusal to relocate the toll plazas according to our rights in the concession agreement. The matter is currently sub judice in the Supreme Court,” Rao added.
Soma is also in the middle of a debt-restructuring programme and has sought from its lenders a moratorium of about two years on term loans.
JAIPUR: The National Highway Authority of India (NHAI) has “foreclosed” the proposed two-lane to four-lane national highway project between Kota and Jhalawar. The Ministry of Environment and Forests’ refusal had come some time back, but hectic parleys and requests finally failed to pave way for the project.
The state forest department had recommended to the MOEF that the project will involve felling of trees and will also run through the Darrah wildlife sanctuary and affect the tiger reserve there badly. Though tigers are yet to be relocated there.
The Darrah National Park – also called the Rajiv Gandhi National Park – consists of three wildlife sanctuaries of Darrah, Chambal and Jaswant Sagar. It was declared a national park in 2004 and is spread over a total area of 250 km. It is separated from the Ranthambore national park by another 250 sq km stretch of Ramgarh Vishdhari Wildlife Sanctuary.
Interestingly, after NHAI had frozen the alignment of the thoroughfare, the state government had declared the tiger reserve in Darrah.
The NHAI proposed a four-lane highway stretch of 88.06 km. Of the total, 54 km road alignment was impacting 273 hectares of forest cover. The NHAI had pleaded the state government to accord consent of the forest department for the past two years but in vain. “The project has been ‘foreclosed’ as the construction work on 70% of the proposed alignment cannot be taken up due to refusal by MOEF. Years of hardwork involved from designing to calling bidders has been waste,” said a NHAI official.
The project was announced four years back by the state government aiming to connect the major cities and to boost trade in Hindaun region.
The NHAI had treaded very cautiously and proposed the upgradation of the existing road from Kota to Darrah to avoid forest land.
MANESAR: The National Highway Authority of India (NHAI) has assured that work on six-laning of the Gurgaon-Jaipur highway will be over by March 2014 and that the developer, Pink City Expressway Private Ltd (PCEPL), will also be carrying out repairs after monsoon. If this seems an impossible target to achieve – with work virtually at a standstill for the past few months as borne out both by TOI reporters, our readers and company sources – what knocks out the bottom from this assertion is PCEPL’s incredible claim to TOI that 82 per cent of the work is over even as it says in the same breath that NHAI has failed to make available 60 per cent of the land required for the project. The company is, believe it or not, in the midst of a drive to “reduce its overheads and restructure” by downsizing its workforce!
On August 27, five senior employees were called to the headquarters of the company at Manesar and asked to resign. A day later, all 30-odd employees working in the quality control lab – based at Kotputli and near Manesar – were called in, ostensibly to appear for a written exam, four years after joining the company. Those who “failed” were told to quit. In January this year, another 30-35 junior level employees had been laid off. The five asked to resign this month include those handling critical “packages”, sections of the highway project.
Even as NHAI routinely extends the deadline for the 225.6km highway project, the company says it is reducing its overheads as well as undertaking re-structuring to reflect the pace of the project. PCEPL spokesman and vice-president (planning) Ajay Gupta, speaking to TOI at the company’s office in Manesar, claimed that as much as 82 per cent of the work has been completed and hence many employees were no longer required. But, seemingly unaware of the contradiction, he added that NHAI has been unable to hand over the required land for completing the project. “Only around 60 per cent of the land required for the project has been made available to us,” he told this reporter. Of the 83 structures to come up on the highway – including flyovers, pedestrian underpasses, vehicular underpasses, drains etc – only 31 have been completed and 13 more are under construction.
A company official admitted that an acute lack of funds had prompted the company to start trimming its workforce. “The 225.6km project was initially divided into six packages, with each package entrusted to a senior PCEPL employee,” says the official. Of the six package in-charges, three have been asked to resign. Two other departmental heads are also reported to be on their way out. “It’s a continuous process of re-structuring. Ultimately, please understand, it’s a project with a delay of two years…we are not going to be able to claim overheads (from the NHAI)…so we have to ensure that overheads are manageable.”
Asked if they would be able to complete the project by March 2014 – the new deadline given by NHAI – Gupta pauses for a while and then says: “March 2014 may not be possible…June may be more practical.”
The ground reality is starkly different. Those working on the project – including sub-contractors employed by PCEPL – admit that for the past three months, no work has taken place. Flyovers are lying half-completed, a point that PCEPL’s top officials concede on record. Even if work starts now in right earnest, contractors claim that at least two years will be needed to complete all the structures. But with funds reducing to a trickle, it doesn’t seem likely that work will start anytime soon. Machinery can be seen lying idle along the side of the highway. Even where land is available – a sore point with the concessionaire – work is yet to start.
“In highway construction, each equipment doesn’t cost anything less than Rs 50 lakh. If you don’t have land, this equipment will lie idle…slowly these contractors go into red. Finally, after one-two years when the land is made available, these contractors don’t have the funds to perform anymore,” says Gupta. So, old contractors have left and new ones have been brought in.
“As per our contract, our commencement date was April 2009. We were supposed to get 100 per cent of the land by June 2009. We didn’t get an inch of land,” says Gupta and yet the contractors were “pressured to mobilize quickly”. The mess is there for all to see.
Industry players say cancellations could deter private investments
The Centre’s ambitious plan to kick-start development of critical infrastructure, including roads, during an election year has hit a barrier with the National Highways Authority of India (NHAI) deciding to scrap six projects worth Rs 4,000 crore due to land acquisition hurdles.NHAI is mandated to acquire land to develop national highways. It has so far scrapped four projects in Goa and Kerala and has now decided to let go off two more this year in Kerala, said a senior NHAI official. The projects could have added more than 420 km to the highway network. NHAI was looking to widen the national highways running through these states.
V K Sharma, chief general manager for land acquisition at NHAI, told Business Standard: “So far, we have terminated four projects in Kerala and Goa and we are in the process of terminating two more in Kerala. Land acquisition also remains a hurdle in West Bengal, but we have not scrapped any project there.”
Kerala and Goa are the only states where the authority has given up projects due to land acquisition troubles this year. This could be a deterrent to private sector investments in the country, according to industry players.
“These decisions send out a wrong message to investors. Land acquisition has to be done with coordination between state governments and NHAI,” said M Murali, director-general, National Highways Builders Federation (NHBF). The enactment of a new land acquisition law could help make acquisition easier for public utility projects, he added.
Undeterred by the six projects being scrapped, NHAI is now looking to acquire 10,000 hectares during the current financial year. It has acquired 4,000 hectares and looks to award 9,000 km of road projects during the year. “We have already acquired 4,000 hectares this year and we have set a target of 10,000 hectares for the year. We are certain that we can achieve that,” said Sharma.
The land acquisition target for the year is more than 50 per cent over the last years achievement when NHAI acquired 6,669 hectares.
Last year, the road transport ministry could award only a little more than 1,000 km of road projects and the prime minister had expressed concern over the delay in road development. The delay, largely caused by environmental clearance and land acquisition problems, had kept many private sector investors away from road projects. Last year, as many as 13 projects received no bids from the private sector.
According to the road transport ministry, a little more than 30 projects are delayed due to land acquisition troubles. West Bengal, Kerala and Assam each accounted for at least six projects. According to the existing norms, NHAI should take over 80 per cent of the total land before inviting bids from investors to develop projects. The remaining 20 per cent has to be completed within three months of awarding the project.
According to the National Highways Builders Federation, the criterion is not met in most instances with NHAI struggling to acquire land on a stretch and instead acquiring in a fragmented manner, which makes development difficult.
Experts have also pointed to NHAI’s inability to plan well after it had to scrap the projects in the states. “Kerala and Goa have limited land availability and the state governments have been opposing the plans to acquire land for roads. The NHAI should have studied the situation more closely before planning to undertake the projects. But with the number of vehicles on the rise, the state governments should also look at a sustainable model,” said Vishwas Udgirkar, senior director at consultancy firm Deloitte Touche Tohmatsu.
The Ministry of Road Transport has been trying to revive interest in the road sector through a slew of measures including amendments in the exit policy for private developers and rescheduling the premium that the developers owe the National Highways authority.
Decides to hand over Coimbatore-Mettupalayam road project to State Highways
In what could be its first salvo at the State government, the National Highways Authority of India (NHAI) on Tuesday withdrew from a project to extend National Highway-67 in Coimbatore district between Kangeyampalayam to Mettupalayam. A top NHAI official described it as the first step towards the national agency withdrawing from Tamil Nadu.
This decision could have a bearing on major projects in Tamil Nadu, where the NHAI alleges it is encountering a series of hurdles from the State government. Especially at stake is the Chennai Port-Maduravoyal elevated corridor project. The NHAI has approached the Madras High Court for help in early execution of the Rs. 1,800-crore project.
The NHAI has withdrawn from the project to four-lane the Coimbatore-Mettupalayam road in the State. It has written to the Ministry of Road Transport and Highways that this stretch of NH-67 be handed over to the State Highways for widening and maintenance.
“This is the first step towards the NHAI withdrawing from the State. The State government had asked for too many changes in the proposal including shifting of toll plaza. But we could not accede to their demands,” NHAI Chief General Manager (technical) I.G. Reddy told The Hindu. The letter of acceptance for the project was issued in July 2012, but the concession agreement was not signed as land was not available. The State government had made two requests for shifting of the toll plaza, but NHAI objected the second time as many structures would have to be demolished. The State government also withdrew its consent for the alignment.
According to Project Director of NHAI in Coimbatore Ganesh Kumar Saride, the Rs. 617-crore NH 67 (National Highways) extension project was mooted in 2006. It was proposed as a four-lane project from Coimbatore to Mettupalayam. Later, the NHAI decided to begin the extension from Kangeyampalayam, near Sulur. The alignment was for a greenfield project over a total stretch of 53.93 km till Mettupalayam. The proposal was to have a toll plaza at Narasimhanaikenpalayam. The project included four bypass roads, three road overbridges and one major bridge across the Noyyal. The land to be acquired was 875 acres. But no land has been acquired yet. Now, the Letter of Award for the project, issued in 2012, has been withdrawn.
Farmers’ associations and several residents on the proposed stretch have been opposing the project. They had sought a modified alignment for the project as the land acquisition for the project would have taken away many farms lands and displaced residents.
K. Kathirmathiyon, secretary of Coimbatore Consumer Cause, told The Hindu on Tuesday that the main objection to the project was against collection of toll on the existing Mettupalayam Road. Handing over the stretch to the State government was a welcome move and the Chief Minister should give special attention to widening of the Mettupalayam road and developing a bypass road for Mettupalayam.
National Highway projects worth over Rs. 9,300 crore running to a length of 1,037 km across the State have been delayed due to various reasons, including slow pace of land acquisition.
The IDFC-led consortium’s R1,600-crore loan to the Delhi-Gurgaon expressway project could be in jeopardy as its loan agreement does not allow it to substitute DS Construction, the concessionaire for the project.
The IDFC-led consortium’s R1,600-crore loan to the Delhi-Gurgaon expressway project could be in jeopardy as its loan agreement does not allow it to substitute DS Construction, the concessionaire for the project. National Highways Authority of India (NHAI), which has been fighting a running battle with DS Construction over the poor management of the expressway, had served a termination notice to DS Construction last year — in case NHAI wins the case, currently in court, the IDFC-led consortium will find it difficult to enforce its rights and bring in another concessionaire. This is vital since the consortium’s loan has been based on the future revenue stream of the expressway project.IDFC refused to comment on the matter.
NHAI which had, in January this year, backed a proposal to allow IDFC to buy out 74% of the project’s equity — IDFC was to take on the project’s entire debt and buy 74% of DS Construction’s equity for a token R1 –— has now done a U-turn, and said it does not even recognise IDFC as a bona fide lender to the project.
The other four in the lenders’ consortium are Bank of India, PNB, Oriental Bank of Commerce and State Bank of Bikaner and Jaipur.
The project has an interesting history, with an initial loan of R383 crore given by a Hudco-led consortium. In January 2009, however, DS Construction had approached NHAI to substitute this consortium with one led by SBI — the loan component was then raised to R1,275 crore. NHAI’s consent was required, since under such concessions, NHAI agrees to pay most of the debt in case a project is terminated.
NHAI agreed to the change in lenders in September 2009 subject to certain conditions being fulfilled.
It is after this that the problem started. A year later, in October 2010, DS Construction proposed to change the consortium from an SBI-led one to an IDFC-led one – given the growing traffic on the expressway, the consortium felt the receivables could service a much larger loan.
NHAI had reservations about the changeover and did not sign on to the change in lenders. It said the loan amount had to be related to the size of the project. NHAI was reluctant to let the project’s revenues be used to service the larger loan since, under the agreement it had with DS Construction, were the traffic to exceed 1.3 lakh passenger car units per day, part of the additional revenues were to accrue to NHAI. In which case, even if the project has a high income stream, the IDFC-led consortium will not have access to it after it is terminated.
In September 2012 – two years after the IDFC loan had been given – when negotiations were going on between DS Construction, NHAI and IDFC, NHAI said that DS had given Rs 676 crore of loans to its parent company and this needed to be brought back into the project. Were this to be done, NHAI would have, in all probability, signed on to the tripartite agreement, but DS failed to bring back this money and NHAI did not sign the tripartite agreement.
At a meeting on Tuesday, attended by road minister Oscar Fernandes and Haryana chief minister Bhupinder Singh Hooda, the government decided to take the service of the attorney general in the matter.
