Ar­bi­tra­tion claims stump NHAI as it stares at 18,000cr pay­out

The Times of India (New Delhi edition) - - Times Nation - Di­[email protected] times­group.com

New Delhi: Ex­or­bi­tant ar­bi­tra­tion claims by high­way de­vel­op­ers — which in one case may add up to 13 times of the project cost — has stumped Na­tional High­ways Au­thor­ity of In­dia (NHAI), which could be star­ing at nearly Rs 17,000-18,000 crore pay­out on this ac­count over the next cou­ple of years.

Cur­rently, around 180 ar­bi­tra­tion cases are go­ing on with claims of high­way builders and con­ces­sion­aires to­talling nearly Rs 71,000 crore. On its part, NHAI has made counter claims of around Rs 37,000 crore. Sources said as­sum­ing that ar­bi­tral awards have been around 25% of the claim amounts, it’s roughly es­ti­mated that NHAI may need to pro­vi­sion for a large sum.

Some cases show how sev­eral high­way builders have

Project name made huge claims against the work done. In one case, Mad­hu­con has made claims of Rs 8,199 crore against to­tal project cost of Rs 629 crore – over 13 times the cost of Madu­rai-Tu­ti­corin pr­ject. In an­other case, Soma-Isolux has made claims of Rs 7,036 crore, two-and-a-half times the project cost of Rs 2,747

Road Devel­oper Project

Cost Claim Amount

crore.

An analysis of the claims shows that the claim amount were mostly high and al­most sim­i­lar to the value of works ex­e­cuted by them.

NHAI data show that till March 2018, works worth Rs 1.2 lakh crore were car­ried out by de­vel­op­ers in 426 projects. The high­way builders had gone for ar­bi­tra­tion in 740 seek­ing to­tal claims of Rs 1.07 lakh crore. NHAI also made counter claims of Rs 37,200 crore on road builders for their fail­ures.

How claims are largely in­flated by road builders is ev­i­dent from the fact that in 560 ar­bi­tra­tion cases out of the to­tal 740, claims of Rs 36,100 crore was fi­nalised with to­tal ar­bi­tral awards of Rs 9,171 crore, which was barely a quar­ter of the claim amount. While NHAI has set­tled 220 of these ar­bi­tral awards of Rs 2,098 crore for only Rs 805 crore, in rest of cases the au­thor­ity has ei­ther chal­lenged the ar­bi­tra­tion awards or these are un­der scru­tiny.

Some of the high­way con­trac­tors TOI spoke to ad­mit­ted that they raise large claims know­ing fully well that many of them will be shot down dur­ing ar­bi­tra­tion process.

Full re­port on www.toi.in

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