The inordinately delayed 136-km Kundli-Manesar-Palwal (KMP) Expressway is in jeopardy. The lead lender for the e-way project, M/s IDBI Bank, has informed the Haryana government that there has been no inflow of funds from the concessionaire for the past several months.
Haryana State Industrial and Infrastructure Development Corporation (HSIIDC), which is the executing agency for the development of the project on January 31, 2013, asked the IDBI Bank to debit the escrow account maintained by the concessionaire for a sum of Rs. 17.88 crore towards damages for the delay in achieving the commercial operation date of July 2009 and remit it to HSIIDC.
In its response on February 19, the bank wrote: "The concessionaire is in huge defaults in payment of dues on term loans availed by it to all the lenders. There is no inflow of funds from the concessionaire into the escrow account for the past 5-6 months. We have taken note of your demand and shall honour the same as per provisions of the concession agreement as and when the funds are available in the escrow account."
Haryana officials said that the concessionaire has so far failed to pay even a single paisa towards the damages.
In reply to a query by HT, a KMP Expressway spokesman said: "Regarding the payment of damages due to the delay, a Chandigarh court, through its April 6, order directed the HSIIDC not to take any penal action against the concessionaire." The spokesman, however, did not comment on the communication sent by IDBI Bank to HSIIDC on non-inflow of funds from the concessionaire into the escrow account.
Following concessionaire's failure to complete the project by the stipulated deadline of July 2009, the HSIIDC in April 2012 issued a show cause notice seeking explanation as to why weekly damages at the rate of 0.01 % of the total project cost of part thereof should not be claimed from the concessionaire. The reply of the concessionaire was found untenable by the corporation.
Subsequently, HSIIDC on July 2, 2012, asked the concessionaire to deposit Rs. 17.88 crore as damages for delay in achieving the commercial operation date as per clause 15.4 of the concession agreement.
Haryana officials said the concessionaire was asked to deposit Rs. 17.88 crore forthwith and in any event within 15 days of receipt of the HSIIDC communication with annual 18% interest. "The concessionaire was also told that in case it failed to comply, HSIIDC would take appropriate action as provided in the concession agreement. This included issuing necessary instructions to the escrow account,'' officials said.
When the concessionaire failed to deposit the damages, the corporation wrote to the lead lender IDBI Bank in December 2012 asking it debit the escrow account for 17.88 crores as an interim measure and depositing the amount in the HSIIDC account. As per the terms of escrow account agreement of January 2007 and concession agreement, any payment or damages due and payable by the concessionaire to HSIIDC shall be withdrawn by the escrow agent from the account and credited accordingly, officials said.
KMP Expressway - a jinxed project?
THE PROJECT: A 136-km expressway loop around the national capital region (NCR) to provide high-speed connectivity and decongest New Delhi. KMP takes off from the National Highway-1 near Kundli (Sonepat) and joins Delhi-Faridabad-Agra NH-2 near Palwal.
THE BUILDERS: The construction work on built-transfer-operate basis was allotted to KMP Expressway Ltd, a consortium of M/s Madhucon Projects Ltd, DS Constructions and Apollo Enterprises on November 14, 2005.The concessionaire will construct, operate and maintain the project for 23 years and nine months from the appointed date.
DEADLINE: Started in 2006, the project was to be commissioned on July 29, 2009. The concessionaire has set a fresh deadline of May 31, 2013.
CURRENT STATUS: Delayed by over three years, 68.69% of the project was complete as on Jaunary 31, 2013.
COST: Rs. 1,915 crore (estimated)
What is an escrow account?
It is a separate bank account for keeping money that is the property of others. In the case of KMP Expressway, it was used for lending arrangements and keeping money for project financing.
The likely road ahead
Since the project is being monitored by a committee constituted by the Supreme Court, an application was filed in November 2012 seeking directions to the concessionaire to stand by its commitment to complete the project by May 31, 2013, failing which all its claims on the project would be nullified and the Haryana government would undertake the pending construction work.