BJP govt in dilemma over KMP E-way project

  • Hitender Rao, Hindustan Times, Chandigarh
  • Updated: Dec 01, 2014 08:56 IST

The Bharatiya Janata Party government in Haryana is in a fix over working out a solution to put the jeopardised Kundli-Manesar-Palwal (KMP) Expressway project back on track. The inordinately delayed 136-km project is running behind schedule by over five years and is entangled in legal and financial complications.

The IDBI bank, which is the lead banker for the project, had served the concessionaire — M/s KMP Expressways Limited — with a substitution notice. This meant that the lenders had decided to step in for substitution of the concessionaire on account of its flagrant and continued defaults in performance of its financial and other obligations under the Common Rupee Loan Agreement.

Hooda govt approved paying `1,300 cr as settlement money

Subsequently, the previous Congress regime led by Bhupinder Singh Hooda, which had allotted the construction work of the expressway to the concessionaire, decided to go beyond the provisions of the concession agreement. However, this option entails terminating the concession agreement with mutual consent and giving the contract for construction of the project to a new company, a rather debatable alternate.

The previous regime also approved termination payment of about `1,300 crore to be paid to M/S KMP Expressways and lenders by the new company, which will be given the contract to complete the project. The `1,300 crore fixed as termination payment is on account of the work done on the delayed project.

While four options were discussed during a meeting of the High-Powered Committee (Expressways) held under the chairmanship of chief secretary in July 2014, no consensus could be reached.

Option approved beyond the provisions of concession agreement

These four options were suggested by M/S Feedback Infra Pvt Ltd, the independent consultant engaged by the Haryana State Industrial and Infrastructure Development Corporation (HSIIDC), the executing agency for the development of the expressway. The options were — substitution by lenders selectee or HSIIDC nominee strictly as per terms and conditions of the concession agreement; termination of concession agreement by the HSIIDC on account of concessionaire event of default; termination of concession agreement due to political force majeure clause as per the concession agreement and termination of concession agreement with mutual consent and giving concession to a new company.

The last option, which the previous government approved, is beyond the terms and conditions of the concession agreement and hence debatable.

Lack of clarity

“There is no clarity on how the valuation of``1,300 crore as termination payment was reached at by the independent consultant. Then there are legal issues, including an arbitration matter involving M/S KMP Expressways and HSIIDC, which need to be addressed. All these issues need to be deliberated upon before the government decides the way out,” said an official.

Host of agreement papers

The previous government had also initiated the process of drafting various agreements, which are required for termination of the concession agreement and grant of contract to a new player. The drafts of standstill agreement, completed works payment, revised concession agreement, deposit and withdrawal agreement were discussed among HSIIDC, project lenders and the concessionaire. However, they have to be approved by the new government in the state.

CM meeting Gadkari today

Chief minister Manohar Lal Khattar along with industries minister Capt Abhimanyu on Monday will have a meeting with Union minister for road transport and highways Nitin Gadkari on the fate of the KMP expressway project.
“The options for putting the expressway project — which is being monitored by the Supreme Court — back on track will be deliberated upon by Khattar and Gadkari,” said an official.


THE PROJECT: A 136-km expressway loop around the national capital region (NCR) to provide high-speed connectivity and decongest New Delhi. The KMP Expressway 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. DS Constructions is the lead consortium partner in the project. 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.

CURRENT STATUS: Delayed by over five years, just 68.85% of the project completed till November 2014.

COST: Rs 1,915 crore (approximately)

The concessionaire

A concessionaire is the holder or operator of a concession. The Haryana government by way of an agreement has granted KMP Expressways Ltd the concession to construct, operate and maintain the project for 23 years and nine months commencing from the appointed date and ending on transfer date. The concessionaire will have exclusive right, licence and authority during the subsistence of the agreement.

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