National Highways Authority of India (NHAI) may take back three stranded road assets worth over Rs 2,100 crore in southern India. A senior NHAI official confirmed to FE that the authority is in talks with the concessionaires to take back the assets, though no settlements on their claims have been arrived at. Two concessionaires — Larsen & Toubro and MEP Infrastructure Developers — have terminated the concessions at their end.
“It is true that these assets are stuck, and there are discussions over taking them back. We are currently evaluating the claims raised by the companies and the arbitration process is going on,” he said.
The three projects, all in Tamil Nadu, are L&T’s Chennai-Tada Tollway project, MEP’s Chennai Bypass Toll Road and Essel Infraprojects’ Walajahpet Poonamallee Toll Roads Project, which is worth nearly Rs 1,288 crore.
The projects have been derailed due to several reasons. In one case, not enough land was available while in another, differences between the concessionaire and NHAI over rules relating to the notification of fees has disrupted work. Moreover, in one instance, commercial vehicles and even passenger vehicles have been evading toll, compelling the concessionaire to halt collections altogether.
Essel Infraprojects, it is believed, is willing to continue with the Walajahpet Poonamallee Toll Roads project if NHAI provides clarity on the categories of vehicles that can ply on the highway and the toll to be charged.
Industry sources say Essel had requested NHAI to alter some parameters midway through construction. Work on the Walajahpet Poonamallee project commenced in September 2013 with the completion date set at June 2016. However, barely 5-10% work had been completed before differences arose between NHAI and the concessionaire.
While road construction has picked up this year, more than Rs 17,000 crore worth of road projects — across 1,600 km — remain stalled primarily because it has been difficult to acquire land or the promoters’ inability to mobilise resources.
L&T’s Chennai Tada project worth Rs 419 crore, for instance, has been stuck for want of land. The road is being developed by L&T’s infrastructure arm Infrastructure
Development Projects. Construction had commenced in April 2009, and was to be completed in September 2011,but the road remains incomplete. The project turned into a non-performing asset in September 2015.
R Shankar Raman, CFO, L&T, said the arbitration process was on and that both NHAI and L&T realise their responsibilities. “There is some back and forth and it will be sometime before a final decision is reached,” Shankar Raman said.
Mumbai-based MEP terminated the concession agreement signed with NHAI for Chennai Bypass Toll Road in April. The project achieved commercial operation date in May 2013, but operations were impacted due to differences with NHAI over the notification of fees and instances of evasion of toll. MEP has handed over the facilities and toll plazas to NHAI.
Essel Infraprojects said in an email statement, “We would like to refrain from commenting on any market speculation.” The Walajahpet Poonamallee road has Rs 1,020 crore of long-term loans, with an unconditional and irrevocable corporate guarantee from Essel Infraprojects (EIL) to the lenders for debt servicing obligations, according to an April 2016 CARE Ratings report. CARE has rated the project BBB+, saying it takes cognizance of EIL’s guarantee for cash support to maintain the requisite amount in debt service reserve account in case of any shortfall in the project.