1. CAG pulls up NHAI for favouring Reliance Infra, L&T, IRB

CAG pulls up NHAI for favouring Reliance Infra, L&T, IRB

Putting NHAI in the dock for favouring private players, CAG today said Reliance Infra, L&T, IRB and other companies...

By: | New Delhi | Published: December 23, 2014 10:39 PM
Road users will have to suffer this "extra burden" due to NHAI fixing longer concession periods for private operators to collect toll. (Reuters)

Road users will have to suffer this “extra burden” due to NHAI fixing longer concession periods for private operators to collect toll. (Reuters)

Putting NHAI in the dock for favouring private players, CAG today said Reliance Infra, L&T, IRB and other companies have been unduly allowed to collect over Rs 28,000 crore as additional toll on nine major national highways including the Delhi-Agra stretch.

Road users will have to suffer this “extra burden” due to NHAI fixing longer concession periods for private operators to collect toll.

Besides, the special purpose vehicle created by Anil Ambani-led group’s Reliance Infra was found to have diverted a part of the toll funds to invest in Reliance’s own mutual fund.

The CAG in its report submitted in Parliament today said NHAI also gave undue benefits to Reliance Infra SPV for six-laning of a National Highway project as an important clause was ‘deleted’ from the agreement. The company termed the allegations as “baseless and devoid of any facts”.

The CAG audit report on ‘Implementation of Public Private Partnership (PPP) Projects In National Highways Authority Of India (NHAI)’ said toll amount of Rs 902.89 crore collected in three six-laning projects was released prematurely to developers despite failing to meet milestones.

In Delhi-Agra project, an important clause in 6-laning concession agreements for withholding the toll collection in case of failure to achieve milestones was deleted.

“By the end of August 2013, concessionaire (R-Infra SPV) had collected toll amounting to Rs 120 crore and utilised an amount of Rs 78.32 crore in investment in liquid funds,” the report said.

Reliance Infra had formed an SPV in the name of DA Toll Road Private Ltd to collect toll from October 16, 2012.

A RInfra spokesperson, however, said: “The allegations made in the CAG report are completely baseless and devoid of any facts. We have not violated any law/concession agreements. All investments and expenses are made in full compliance of the agreements signed with NHAI and lenders.”

The amounts invested in liquid mutual funds at any given point of time were Rs. 3 to 5 crore, and not the inflated figures alleged in the CAG report, and the same do not represent any “diversion” of funds, as the MF accounts were of the SPVs themselves, he added.

An L&T spokesperson refused to comment, while no comments could be sought from IRB Infrastructure.

About Gurgaon-Jaipur highway stretch, the CAG said, “NHAI did not withhold an amount of Rs 459.87 crore collected by the concessionaire, Pink City Expressways Private Ltd.

“NHAI also sustained loss of interest that would have been earned had the amount been withheld,” it added.

About Varanasi-Aurangabad stretch, the CAG said, “NHAI had not withheld toll collection of Rs 181.25 crore (up to April 2013).”

Similarly, it talked about Rs 262 crore toll not withheld on Panipat-Jalandhar stretch.

Providing details of nine major highways where NHAI has extended concession period resulting in an extra burden of Rs 28,095.54 crore on users, the CAG said the beneficiaries included R-Infra (Delhi-Agra and Pune-Satara), L&T, IRB and Varanasi-Aurangabad Tollway Pvt Ltd (Soma Isolux) and others.

“NHAI considered only tollable traffic instead of total assessed volume of traffic. This resulted in fixing of longer concession period which put an extra burden on road users. During these extended concession periods, the concessionaires would collect toll at least to the tune of Rs 28,095.54, while the roads would become congested for the toll paying users,” the report said.

It said users on Varanasi-Aurangabad would have to pay Rs 11,547.75 crore to Varanasi Aurangabad Tollway Pvt Ltd, while those using Pune-Satara and Delhi-Agra stretches will require to pay additional user fee of Rs 3,421.08 crore and Rs 752.80 crore to PS Toll Road Pvt Ltd and DA Toll Road Pvt Ltd, both R-Infra SPVs.

For Pune-Satara Road, the CAG said “Rs 3421.08 crore is the revenue projected during the 21st year to 24th year by the financial consultant at the time of financial evaluation.”

On Delhi-Agra stretch, it remarked, “Basis of fixing concession period at 26 years by NHAI is not available … Considering toll revenue of at least Rs 188.20 crore per year from 23rd year to 26th year, the total extra burden on road users would be Rs 752.80 crore.”

Likewise, extra burden on road users would be Rs 2,061 crore for Jaipur-Tonk-Deoli stretch, collected by IRB Jaipur Deoli Tollway, Rs 2,143 crore for Beawar-Pali-Pindwara stretch by L&T BPP Tollway and Rs 4,631 crore for Kiratpur-NerChowk by Kiratpur NerChowk Expressway respectively.

Users will have to pay Rs 501 crore extra fee for Zhirakpur Parwanoo to Himalayan Expressway and Rs 1,641 crore on Sambalpur-Baragarh stretch to Sambalpur Baragarh Expressway, it said.

The government auditor made it clear that the Ministry of Road Transport and Highways accepted the “audit observation regarding incorrect adoption of tollable traffic instead of total traffic for determination of concession period.”

It also said that the Ministry had set a target for widening and up gradation of National Highways (NH) at 20 km per day but NHAI’s achievement during 2009-10 to 2012-13 ranged between 3.06 km and 17.81 km per day only.

  1. H
    Harry Potter
    Dec 25, 2014 at 3:21 pm
    What are codes of conduct and standards of corporate governance, code of ethics? Any CXO/MD level official ever got fired (or behind bars) in last 10 years - What happened in this case - any logical conclusion, any culpability established? Please refer TOI article – "whistleblower was right: CBI". Excerpts – "CBI confirmed slain National Highway project engineer Satyendra Dubey's allegation --illegally sub-contracted the multi-crore works awarded to them in the Golden Quadrilateral Project -- M/s L&T had misrepresented the facts". BS Article – "Rajya Sabha nods for whistle blowers bill" – excerpts – "Prasad recalled the sacrifice of Satyendra Dubey, an Indian Engineering Service officer who was killed after he tried to reveal corruption in the Golden Quadrilateral". Please GOOGLE – white collar criminal equivalent of rape and murder- "Cl Action Suit Seeks $100 Million for Pregnancy Discrimination, Other Violations". Please refer International Business Times article – "$100 Million Sought as New Discrimination, Immigration Violations Complaint Filed against L&T". Got slapped with ban by World Bank – please refer ET article – "World Bank bars L&T for 6 months over forgery". Corporate governance or personal fiefdom?
    Reply
    1. H
      Harry Potter
      Dec 24, 2014 at 11:48 am
      What are codes of conduct at L&T and corporate governance, code of ethics? . Any CXO/MD level official ever got fired (or behind bars) in last 10 years – after Satyendra Budey case – any culpability established – did this CBI investigation reached any conclusion? Please refer TOI article – “whistleblower was right: CBI”. Excerpts – “CBI confirmed slain National Highway project engineer Satyendra Dubey's allegation --illegally sub-contracted the multi-crore works awarded to them in the Golden Quadrilateral Project -- M/s L&T had misrepresented the facts”. BS Article – “Rajya Sabha nods for whistle blowers bill” – excerpts – “Prasad recalled the sacrifice of Satyendra Dubey, an Indian Engineering Service officer who was killed after he tried to reveal corruption in the Golden Quadrilateral”. Please GOOGLE – white collar criminal equivalent of rape and murder- “Cl Action Suit Seeks $100 Million for Pregnancy Discrimination, Other Violations”. Please refer International Business Times article – “$100 Million Sought as New Discrimination, Immigration Violations Complaint Filed against L&T”. Got slapped with ban by World Bank – please refer ET article – “World Bank bars L&T for 6 months over forgery”. Corporate Governance or Personal Fiefdom - unchecked?
      Reply
      1. H
        Harry Potter
        Dec 30, 2014 at 11:21 am
        Dear Investors/Analysts/Advisers - Watch Out! L&T top-bres were on selling spree March-2014, leading the pack Chairman Mr Naik sold his L&T shares (Rs 1200 apiece) worth 70 crores in 20 days - March 2014. Post Q1-2014 results L&T share has seen biggest intraday decline of 8 % since July 2009, Citi Group had raised multiple red flags on earnings. Hydrocarbon subsidiary suffered losses of 900 crores, sans stake at Dhamra Port (2500 crores) L&T would have posted losses. Modi Euphoria and upbeat in market saved L&T going below Rs 1300 during q2, a striking closed range of 1200 of March 2014. Part stakes at L&T Inra sold to Canadian FII - (2000 crores). Expecting VGF - Viability Gap Funding) of 3000 crores to complete Hyderabad Metro project. Stake or post losses, Deep Sea or devil? Post Q2 results L&T share plummeted from high of 1673 to low of 1450 (17 Dec, 2014). Before Q3 results it will reach range of 1200 a piece, the rate L&T top bres has made a kill. Post Q3 results another big intra-day fall of 8-10 %, decline to 52 week low of 900. By Feb (end)-2015 no wonder, 5 year low of Rs 600 a piece?
        Reply

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