The NHAI has directed its officials to arrive at valuation of the work done by IL&FS for the termination payment.
Debt-stricken Infrastructure Leasing and Financial Services (IL&FS) may see foreclosure or termination of at least five to seven of its road projects awarded by the National Highways Authority of India (NHAI). These projects got stuck over cost and time overruns. The agency will re-invite bids in due course to complete the balance of work, people close to the development told FE.
The NHAI has directed its officials to arrive at valuation of the work done by IL&FS for the termination payment. The dispute relates to around 25 road projects that are facing cost and time overrun issues due to delay in land acquisitions by the NHAI, according to sources.
Some of the road projects which are under dispute and are being worked for foreclosure are: Khed-Sinnar, Barwa Adda-Panagarh, Pune-Solapur, Patna-Gaya-Dobhi, Jorabat-Shillong, Chennai-Nashri and Balasore-Kharagpur projects. There is one project of National Highways Infrastructure Development Corporation (NHIDCL) – Z Mor Tunnel Project in Jammu & Kashmir.
IL&FS has in general given its no objection to the NHAI and NHIDCL to invite bids for balance work in the affected projects. However, before the award, an amicable settlement has to be finalised for payment of completed work, sources said. “It needs to be seen if IL&FS will lose complete hold over these projects, or they will transfer their stake into some other company which will take over these assets,” sources said.
An email query sent to NHAI officials and IL&FS spokesperson did not elicit any response till the time of going to press.
The ministry of road transport and highways (MoRTH) in March issued guidelines for resolution of stuck road and highway projects due to shortage of funds.
According to a road transport ministry circular, agencies such as NHAI can foreclose the contract by signing a supplementary agreement. It said the authority will make full and final payment to the private player for the “value of work done” or 90% of the debt due, whichever is lower.
IL&FS has claimed that “significant additional investments” were made in these projects which were not covered under the definition of “debt due”, hence the option of value of work done should be considered, instead of lowest of value of work done or 90% debt due. IL&FS is claiming around Rs 16,000 crore from NHAI and NHIDCL under settlement of dispute, sources said.
It is likely IL&FS will get only 25% of what it has claimed, sources said.
IL&FS has already received around 30 bids for the expressions of interest invited in December from potential buyers for its 19 road projects as well as three other assets and businesses, including a sports complex in Thiruvananthapuram in Kerala Of the 19 projects under IL&FS Transportation Networks, the roads development arm, seven are annuity road projects totalling 1,774 lane km, while eight are operating toll projects aggregating about 6,572 lane km. There are also four under-construction projects that would be around 1,736 lane km on completion.