The National Highways Authority of India (NHAI) — the nodal agency that develops highways across the country — on Wednesday served a termination notice to DSC Limited, the Delhi-Gurgaon Expressway operator, for violating several terms of the contract that it had signed with the authority.
“The Gurgaon-based DSC Limited has been given 15 days to respond to the charges. If they fail to give a satisfactory response, NHAI will terminate the contract and take over the operation and maintenance of the expressway,” said an official, who did not want to be quoted.
The violations include the concessionaire’s failure to decongest the 28-km expressway that connects the Millennium City with the Capital, failure to finalise the operation and maintenance programme of the road for 2011-12, and fraud in obtaining financial assistance to the tune of Rs 1,597 crore without NHAI’s approval.
A DSC spokesperson confirmed receiving the notice. “We have just received the letter from NHAI and are studying it and shall respond to it soon and present the facts. In any case, on all the points mentioned in the letter we have been in active communication with the NHAI,” a statement issued by the concessionaire said. Hindustan Times had on November 15 first reported that the Delhi-Gurgaon Expressway operator may lose its contract for violating terms of its agreement with NHAI.
The NHAI in its notice said DSC had diverted funds to the tune of Rs 1,597 crore from the escrow account - jointly held by it and the authority and where money collected as toll charges goes — to its “own companies and unknown account at the cost of ignoring the operation and maintenance obligation such as capacity augmentation, easing of traffic flow and better tolling arrangement”.
“It’s the concessionaire’s contractual agreement to provide comfort and relief to travelers. It has failed to do so despite repeated reminders,” said a NHAI official.
The expressway was the first public-private partnership (PPP) project in the highways sector and was awarded to a consortium of Jaypee Industries and DSC on built-operate-transfer (BOT) model in 2002. It is now run solely by DSC Ltd, a company promoted by NRI businessman HS Narula. The company is currently executing six other highway projects on the BOT model.
The Union Road Ministry, under whose jurisdiction NHAI falls, had on November 3 written to the authority to initiate legal action against DSC. The ministry told NHAI to “not hesitate in terminating the agreement so that a stellar message and warning is issued to the concessionaire that compliance of the contractual agreement is mandatory failing which will be taken against them”.