Even as the NDA government is planning to launch a reworked public-private-partnership (PPP) model where bulk of project risk will lie with the government, the inadequacies of the extant system continue to come to the fore. Two public sector lenders – IDBI Bank and SBI – on Wedensady moved the Supreme Court against the Haryana government’s decision to issue fresh tenders for completion of the stalled work of the Kundli-Maneser-Palwal (KMP) expressway, saying the state government had failed to recognise their rights despite the old concessionaire, DSC Ltd-led consortium, owing over R1,400 crore to them.
The lenders have sought a clarification from the SC that their rights are taken care of till they recover outstanding dues of R1,419.15 crore as on March 31, 2013.
HSIIDC has recently floated fresh tenders to complete the 136-km expressway, that was to be completed by December, 2009, after the Supreme Court on January 30 expressed discontent over the slow progress of the expressway. The court had directed Haryana to award fresh contracts for the construction of the expressway within two months and ensure resumption of work in three months.
The Haryana State Industrial Development Corporation (HSIIDC) has taken steps to appoint a new concessionaire for the project “without safeguarding the dues of the lenders” advanced from public funds for construction of a national asset, the banks have said, adding that the HSIIDC was a party to the substitution agreement entered with KMP Expressways Ltd in January 2007 and have an obligation to secure their interests.
Feeling threatened by the unilateral revocation by HSIIDC of the agreement to replace the existing concessionaire, the lenders have now sought an opportunity to be heard as they have “substantial economic interest to the tune of R 1075.03 crore (amounts disbursed) in the form of loan investments, which amount to 56.14% of the original project cost. They want the SC to direct the HSIDC that the award of the fresh contract shall be subject to the new concessionaire taking upon the existing liabilities and obligation of the lenders.
Alleging that HSIIDC had grossly neglected and failed to secure the lenders’ interest by not stipulating that the new concessionaire would take over the dues, the application filed by them stated that the Haryana government had not included the amount owed to them by KMP Expressways Ltd in the total project cost of the tender floated on February 20. “The action of HSIDC is unilateral, arbitrary and contrary to the amicable resolution,” they added.
According to the banks, if HSIIDC decides to substitute the concessionaire by any other person then it is the responsibility of the state authority to ensure that a suitable condition acceptable to the lender’s agent is provided for the payment or takeover of the dues.