If there is an upside and the concessionaire is making extra profit, they don’t ask the govt to take a share of profit. If things go the other way, they should not come to the govt asking it to share losses, says a senior MoRTH official
The National Highways Authority of India (NHAI) has turned down a plea from IDFC, the operator of the Delhi-Gurgaon Expressway, for either monetary assistance or extension of the tolling period by three years to compensate for the losses caused by the removal of the toll plaza near the IGI Airport in April, 2014.
IDFC — which took over the project including the Rs 1,600-crore debt of the troubled concessionaire DS Construction (DSC) in early 2014 after the Delhi High Court approved a tripartite settlement including the NHAI — had sought Rs 500 crore as compensation from NHAI. Alternatively, it asked for extension of the concession period by three years to 2026.
According to sources in the ministry of road transport and highways (MoRTH), NHAI found no merit in IDFC’s claims for compensation. “There is no provision for paying compensation in the concession agreement,” an official said. The sources, however, added that two cases relating to the matter were pending with the courts.
AK Sharma, project director at the expressway, told FE that NHAI would soon wrote to IDFC, detailing why its requests have been rejected.
IDFC had claimed Rs 380 crore as compensation for the loss of revenue on account of the closure of the toll plaza at the 24 km point (near IGI Airport) and another Rs 78 crore to offset the losses that arose form the ban on toll collection for 15 days in September 2012 and non-revision of toll rates for two years from 2012.
“When the bidders participate in such public-private partnership projects, they are aware that the commercial risk is with them. If there is an upside and the concessionaire is making extra profit, then they don’t come and ask the government to take a share of the profit. If things go the other way around, they should not come to the government asking it to share their losses,” a senior MoRTH official said.
The 27.7-km build, operate and transfer expressway project, which includes 11 flyovers and overpasses, was first awarded to a consortium of Jaiprakash Industries and DSC and subsequently the latter took control of the project.
The project was completed in 2008 but NHAI issued termination notice to the concessionaire in early 2012 as the firm failed to meet operational guidelines and for allegedly committing fraud in the form of refinancing the project.
As the lead lender (re-financier), IDFC later sought to take over the project and after some initial reluctance, NHAI allowed it to take over the project along with the toll rights. The high court, which approved the tripartite agreement, had earlier stayed the termination notice served by NHAI.