1. After crackdown on defaulting developers, NHAI gives them chance to escape being debarred from bidding

After crackdown on defaulting developers, NHAI gives them chance to escape being debarred from bidding

The National Highways Authority of India (NHAI), which had terminated a clutch of concession agreements citing default by developers since April 2014, has now given the developers concerned a chance to escape getting debarred from bidding for new projects.

By: | New Delhi/mumbai | Updated: November 4, 2017 10:23 PM
National Highways Authority of India, NHAI, highway authority tender cancellation When contacted, NHAI chairman Deepak Kumar told FE that the authority had written to the developers to give reasons for revoking the non-eligibility. The NHAI might bid out some of the projects afresh.

The National Highways Authority of India (NHAI), which had terminated a clutch of concession agreements citing default by developers since April 2014, has now given the developers concerned a chance to escape getting debarred from bidding for new projects. With the “non-eligibility” period for these firms set to expire, the authority has asked them to make representations before November 6 for a possible review. When contacted, NHAI chairman Deepak Kumar told FE that the authority had written to the developers to give reasons for revoking the non-eligibility. The NHAI might bid out some of the projects afresh.

However, it was not immediately clear whether all the original developers continued to have interest in the projects, which went down due to aggressive bidding and inflated project costs. Many of them are, however, likely to opt for arbitration, as they reckon that the defaults were due to reasons beyond their control.

The projects that were terminated include those of Larsen &Toubro, Hindustan Construction Company, Essel Infra Projects, MBL Infra, among others. Both public-private partnership projects — including BOT toll and hybrid annuity — and conventional EPC contracts were among the ones cancelled by the NHAI.

In a statement, L&T said: “L&T IDPL, a subsidiary of L&T, terminated a concession for the Pimpalgaon-Nashik-Gonde project due to force majeure events arising from law and order issues as per provisions of the concession agreement, after completing the project. In our opinion, the termination cannot be treated as a concessionaire event of default. The matter is sub-judice as it is under arbitration. As per the NHAI directions, the matter has been represented and a decision is awaited from them (NHAI) shortly.”

In a statement, HCC said,”The NHAI had uploaded the list of 20 projects on October 30, 2017 on its website and it stands withdrawn from NHAI portal after representation from concerned companies and industry bodies. The project concerned, namely Raiganj-Dalkhola Highways, has been delayed for six years due to land acquisition delays on account of NHAI. We feel that the action by NHAI is premature, especially since the alleged termination is undergoing an adjudication or conciliation process. We are glad that the overall list and thereby HCC’s name has been withdrawn.”

Vijay Chhibber, former road secretary, told FE, “Some of the companies named are among the most professionally managed and reputed engineering companies in the country and certainly, steps should be taken by the Authority, if required. However, a proper due diligence should be done, which I expect would have been done, in order to come up with such a list.”

Jagannarayan Padmanabhan, director and practice-lead, transport and logistics, Crisil Infrastructure Advisory, said: “NHAI has taken a decisive step around issuing termination notice to concessionaires on some of the projects. This is positive for the sector and will help in moving past stuck/ stalled projects and in a way act as a deterrent for any future aggressive bidding by the developers. However, genuine concessionaires should not be penalised which could caste a gloom over the sector which is just out of the woods and affect fresh investments by key players.”

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