Delayed loop mired in legal, financial tangles
CHANDIGARH: The 136-km Kundli-Manesar-Palwal (KMP) Expressway, thrown open to the public by Prime Minister Narendra Modi on Monday, is a project behind schedule by over nine years having remained mired in and legal and financial complications.
The Haryana State Industrial and Infrastructure Development Corporation (HSIIDC) was appointed as the executing agency by the state government for the development of the expressway project on built-operate-transfer (BOT) basis. The estimated cost of the project was about ₹1,200 crore and that of land and allied expenses was Rs 1,110 crore.
THE FIRST CONTRACTOR
The previous Congress government had allotted the work for development of expressway to M/s KMP Expressways Ltd, a special purpose vehicle (SPV) formed for the purpose. The concession agreement was executed by the HSIIDC with the concessionaire on January 31, 2006. The construction period was three years with commercial operation date (COD) as July 29, 2009.
Since the concessionaire M/s KMP Expressways Ltd could not complete the project, the BJP government in the state terminated the contract in March, 2015. The project faced a number of hindrances. There were land acquisition issues of interchanges and ramp plazas because of litigations by landowners, operative stay granted by the courts, permission from the Railways for rail over bridges, shifting of electricity lines, demands by local residents for modification in the crossings and structures.
To add to the delay, M/s KMP Expressway Ltd, initiated arbitration proceedings in October 2013 raising disputes over change of scope issues, alleged delay in conveying decision on use of fly ash and thereby claiming damages of Rs 13,920 crore.
The HSIIDC on the other had filed counter-claims of ₹17,973 crore as on February 2017. The money lenders of the previous concessionaire also filed damages of HSIIDC Rs 1,737 crore against HSIIDC.
The Corporation also filed counter claims amounting to Rs 8,518 crore. The disputes are being heard by arbitrators and carry possible financial implications for the government. The concessionaire had defaulted of its various obligations since the start of the project and there were also disputes between the members of the special purpose vehicle which caused delay of over five months in achievement of financial closure.
BAILOUT PACKAGE
Despite repeated completion deadlines, the concessionaire continued missing them, giving one justification or the other. The delay was also not firmly tackled by the previous Congress government, which decided to go beyond the provisions of the concession agreement, thereby terminating the concession agreement with mutual consent and giving the project to a new company.
As part of the “bailout” plan, the Congress government
decided the termination payment of about Rs 1,300 crore to be paid to the concessionaire and the project lenders by the new company.
The ₹,300 crore fixed as termination payment was on account of the work done on the delayed project by the then contractor. However, this was rejected by the BJP government, which came to power in 2015.
SECOND CONTRACTOR
The present government terminated the contract on in 2015 and decided to get this project completed by dividing into two sections — Kundli-Manesar section and Manesar-Palwal section.
For the 52 km Manesar-Palwal section, work was allotted in March 2015 to a joint venture of M/s KCC Buildcon Pvt. Ltd. – Dilip Buildcon Pvt Ltd. with contract value of Rs 483 crore. The work in this section completed on March 31, 2016. Work of development of 84 kilometre Kundli-Manesar stretch was allotted to M/s Essel Infraprojects Limited in July, 2015 with the project cost of Rs 1,863 crore. This stretch was thrown open to public on Monday.