Already delayed by more than three years, the Kundli Manesar Palwal (KMP) Expressway project has run into a fresh dispute. The concessionaire for the project, M/s KMP Expressways Ltd, has invoked the arbitration clause of the concession agreement following a dispute with the Haryana government on the change of scope of the project.
While the concessionaire initially claimed Rs. 527 crore that was brought down to Rs. 199 crore for the change of the scope of work done so far, the Haryana State Industrial and Infrastructure Corporation (HSIIDC), which is the executing agency for the project, has finalised the claimed amount to Rs. 79 crore. Haryana officials said the concessionaire had submitted inflated cost estimates against the change of scope.
The HSIIDC has also raised a bill of Rs. 180 crore on account of negative change of scope due to the reduction in quantity of fly ash and granular sub-base (GSB) used in the construction. This means that the concessionaire will have to pay the state government the differential amount.
The concessionaire has challenged the details of change of scope and invoked the arbitration clause as per dispute resolution provisions of the concession agreement. It has also given a notice for the constitution of an arbitral tribunal and nominated its arbitrator - BP Bhattacharya.
The HSIIDC has also appointed a former engineer-in-chief of Haryana PWD, KB Lal Singal, as its nominee arbitrator. The third arbitrator is yet to be appointed.
HSIIDC officials said that cost estimates against the change of scope would be finalised after adjusting the financial implication on account of negative change of scope. "The concessionaire should complete the project first. The issues pertaining to change of scope will be settled thereafter,'' said an HSIIDC official.
A KMP Expressways Ltd spokesperson said: " The arbitration clause has been invoked because the funds payable due to the change of scope of the project were not being released to us. The Haryana government felt that the change of scope claims raised were on the higher side even though a breakup was provided. Arbitrators from both parties would arrive at a just figure for the change of scope claims that the Haryana government should be agreeable to pay. If the change of scope claims do not get sorted out, there could be a delay in the project. But now a fast-track arbitration settlement could actually help in the progress of the project."
The HSIIDC in a communication to concessionaire has refuted the contentions given by the latter in the arbitration notice saying: "The records reflect that the concessionaire, in its eagerness to create a dispute, is not following the procedure laid down under article 39 of concession agreement."
The HSIIDC has imposed damages on the concessionaire for the delay at the rate of 0.01% of the total project cost per week with effect from July 30, 2009. The penalty amount till May 31, 2012, was calculated as Rs. 17.88 crore.
Change in scope of work
The concessionaire undertook change in the scope of work for the construction of interchanges of the expressway on national highway(NH)-8, NH-1, NH-10 and NH-2, necessitated as the National Highway Authority of India wanted to make the junctions of NH-8 and NH-10 signal-free. The junctions of NH-1 and NH-2 were also altered to align them with the proposed eastern peripheral expressway. There was a change of scope due to increase in the height of the railway over bridge (ROB) on the Garhi-Harsaru-Farukhnagar rail line for the movement of double-stack containers.
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 three companies formed 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 three years, 68% of the project was complete as on December 31, 2012.
COST : Rs. 1,915 crore (estimated)