Legal tangles stymie core sectors

Transmission and roads are the worst hit as projects worth R20,000 crore face delays.

At a time when the government is trying to push the flagging infrastructure agenda, core sector projects are increasingly being mothballed on account of legal wranglings. Infrastructure projects amounting to well over R20,000 crore are estimated to be stuck in court cases, with road sector players and power project developers among the hardest hit.

Apart from these two areas, projects in sectors such as ports, metro rail and oil & natural gas too have been stalled, sometimes indefinitely, due to ongoing court cases (see chart).The bugbear for core sector project developers, in most of these cases, is land acquisition, with road sections and power transmission projects the worst hit as both entail right-of-way issues.

?Issues of land acquisition or right of way, inadequate compensation and allegations over the tendering process are the most common reasons for projects being taken to the courts,? said Amrit Pandurangi, senior director, Touche Tohmatsu India, adding that issues of environment clearance and funding are also responsible for delays in completion of core sector projects.

Ideally, sponsoring agencies like the National Highways Authority of India are expected to acquire at least 80% of the land before they bid out a project, but often the remaining 20% turns into a problem. In recent meetings with the Prime Minister?s Office and PM?s key advisor C Rangarajan, industry bodies have now suggested that the government should not award projects until all approvals are in place. ?We have proposed to the PMO that projects should not be given out until all homework is done,? said Vinayak Chatterjee, chairman, Feedback Infrastructure and head of CII?s national task force on regulatory framework in infrastructure.

Data compiled by The Indian Express reveals that as many as 17 power projects, a majority of them in the transmission sector, as well as IL&FS? joint venture 3,600 MW thermal project in Cuddalore, Tamil Nadu, are facing protracted delays due to legal issues. ?Most projects that are stuck in the power sector due to court cases are in the transmission sector, with the main issue being right of way,? said a power ministry official. Those affected include Power Grid Corporation, Tamil Nadu Transmission Corporation and the Maharasthra State Electricity Transmission Company. The projects stuck, according to data updated till June 30, 2012, included the 137 km-long Tubinakere- Kothipura transmission line project that is embroiled in court cases at approximately 14 locations as well as the 47 km Sultanpur-Phoolpur transmission line that has six pending court cases.

The situation is no different in the highways sector. As many as 536 claims relating to highway development projects are pending in courts and another 1,099 cases are in arbitration tribunals with a total of R10,000 crore locked up, according to the National Highways Builders? Federation (NHBF). These include the high-profile Northern Periphery Road around Delhi and the Chennai Port-Maduravoyal project. NHBF had recently met NHAI chairman RP Singh to seek faster resolution of these cases. ?The situation is slowly changing but issues relating to land acquisition and the bidding process frequently lead to litigation,? said M Murali, director-general, NHBF.

Allegations over the bidding process have also stalled the award of the fourth container terminal at JNPT, with Adani Enterprises, one of the parties bidding for the project, moving court challenging the government decision to deny it security clearance. The project, which was targeted for 2010 was finally awarded in August last year to a consortium of Port of Singapore and ABG Ports. The Hyderabad Metro Rail Project that is being carried out by Larson & Toubro is also embroiled in litigation over land disputes and complaints of changing alignment.

Analysts point to the need for courts to fast-track core sector projects that already have a long gestation period. ?Special courts should be set up for quick disposal of infrastructure projects. Such courts are also needed as lawyers need specialised knowledge for arguing in such cases,? said Pandurangi.

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First published on: 04-08-2012 at 04:10 IST