In strong message to road firms, NHAI may bar GMR from bids

Written by Timsy Jaipuria | New Delhi | Updated: Jan 11 2013, 07:40am hrs
Stung by the abrupt and unilateral walkout of the GMR Group from the 555-km-long Kishangarh-Udaipur-Ahmedabad National Highway project alleging delays in approvals, the ministry of road transport and highways and the National Highways Authority of India (NHAI) are weighing various options, including initiating procedures to debar the firm from upcoming road projects for a few years.

Although a final decision is likely only at the NHAI board meeting expected in a few days, sources in the know told FE that preventing the company from bidding for new projects for a few years is under consideration, as the stay obtained by GMR Infrastructure from the Delhi High Court on forfeiture of R270 crore performance guarantee left the authority with few other options of punitive action.

Road minister CP Joshi is understood to have asked the authority to consider possible punitive options, including debarring. The procedure starts with the issuance of a showcause notice to the party, in this case GMR. The prohibition will come only if the authority is not satisfied with the companys reply to the notice.

GMR had informed the Bombay Stock Exchange on Monday that it terminated a 16-month-old concession agreement with NHAI under which it had promised to pay the authority over R9,000 crore on a net present value basis. The GMR walkout, followed by a threat by the GVK Group to leave the 330-km-long Shivpuri-Dewas highway in Madhya Pradesh on similar grounds, sparked a debate among policymakers over the trigger for such action by the countrys largest infrastructure companies.

As reported by FE, the NHAI has even moved the Supreme Court, seeking directions to the ministry of environment over the latters failure to comply with the courts guidelines over forest clearances. Environment minister Jayanthi Natarajan, on her part, had sought to shift the blame to NHAI, saying the ministry was yet to get a complete application from NHAI on behalf of GMR.

NHAI has already slammed GMR, saying it id not give the stipulated 90-day cure period (to rectify and address the deficiencies) to NHAI before taking the call to terminate the agreement.

GMR in its first notice to the authority a few days ago had cited NHAIs failure to get environmental clearance for the 555-km highway project and to notify the revised toll rate on this stretch being widened from four lanes to six as the premise of the termination under clause 37.2 of the concession agreement.

The government apparently wants to send a strong message to GMR and other potential bidders who have taken similar steps or are planning to.

GVK too has sent a notice expressing interest to exit and the ministry fears that there could be others too who would do so; so, this step would be a strong step, another official from the road ministry said. The sources said the debarment (of GMR) could be for 5-10 years.

Justifying its action, GMR had said the highway authority had failed to get the necessary environment clearance for one of the tunnels along the highway. Therefore, the authority has been in continuous default in complying with the provisions of the agreement. The authority has thus clearly repudiated the Agreement, it said.