MoEF gives go-ahead for project dumped by GMR

Written by Timsy Jaipuria | Indu Bhan | Indu Bhan | New Delhi | Updated: Feb 22 2013, 10:28am hrs
The 555-km Kishangarh-Udaipur-Ahmedabad project from which the developer GMR Infrastructure pulled out in early January citing huge delays in clearances, has now got all requisite approvals from the ministry of environment and forests (MoEF). According to sources, with Gujarat, one of the two states through which the highway passes, also giving forest clearance, the MoEF has given the green signal for the project.

The Rajasthan portion of the six-laning project was cleared earlier and in a meeting today, the Gujarat portion was also approved, paving the way for the project to be cleared from the angles of both environment and forest regulations, a ministry official said.

However, the question that now arises is of who will build the project. The NHAI has challenged the GMRs decision to terminate the model concession agreement in the Delhi High court after the company moved the court seeking to prevent the authority from enchasing the performance security of R260 crore.

Legal experts feel that todays environmental clearance wont impact the case pending in the Delhi HC between NHAI and GMR as the case primarily relates to only encashing of performance guarantee and not on the termination of the contract.

The fact of the matter is that GMR has already terminated the contract and it will have no major implications on the case, they said. Now it depends on the parties what the next step will be either GMR will have to continue with the contract as it had cited lack of environmental clearance as the reason for not going ahead with the project or NHAI will look have to look for another contractor.

However, the lawyers feel that NHAI will now be on a stronger footing and can ask GMR to continue with the contract.

Fearing a similar move to prevent enchashment of performance guarantee by GVK, which terminated the Shivpuri-Devas highway project, the highway authority also filed a caveat in the Delhi high court.

GMR had won the Kishangarh-Udaipur-Ahmedabad project in September 2011, through the international competitive bidding route. It was to be implemented through the public private partnership (PPP) model on design, build, finance, operate and transfer basis. Financial closure for the project was achieved in May 2012.

FE was the first to report that GMR Group was walking out of the project, 16 months after it won it in a bid in which it promised to pay the NHAI over R9,000 crore on a net present value basis. The company issued a Notice of Intention to terminate the agreement to NHAI under clause 37.2 of the concession agreement last Friday.

GMR had cited that NHAI had failed to get the necessary environment clearance for one of the tunnels along the highway under the contract, this was NHAIs obligation it had not even asked the GMR Group for more time to do this. Therefore the Authority, the GMR letter says, has been in continuous default in complying with the provisions of the Agreement. The Authority has thus clearly repudiated the Agreement.