FE Editorial : Express solution

Going by the backroom negotiations, as FE reported last week, infrastructure financing firm IDFC will take over the troubled Delhi-Gurgaon expressway from the current franchisee Delhi-Gurgaon Super Connectivity Limited (DSCL) by paying one rupee for the equity and guaranteeing the entire debt of R1,600 crore. If all goes to plan, this holds important lessons on how to restructure troubled projects—National Highways Authority of India (NHAI), the concessioning authority, had issued DSCL a termination notice last year in February alleging operational incompetence as well as for not taking its permission before raising R1,275 crore of loans from IDFC. While it is not clear whether IDFC has found another buyer for the DSCL equity, termination would have hurt it badly. Under the original concession, as in the case of all such projects, NHAI guaranteed to pay the expressway’s debt up to a certain ceiling in case the project was cancelled—lenders like IDFC, however, reckoned the expressway would attract more traffic than NHAI envisaged and so, based on securitisation of future receivables, lent it far more than NHAI had guaranteed. So, had the project been terminated, while DSCL would have lost its equity, IDFC stood to lose many times more.

Once IDFC takes over the expressway, it has two options: sell this to another promoter who, hopefully, can make it work well enough to service the debt or to appoint an operating/tolling company to fix the mess. One solution, being implemented right now, is that on the

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