It took some resolute decision making from an otherwise lackadaisical BJP government in Haryana to thwart the proposed Rs 1,300 crore sum fixed by the previous Congress regime as payment for terminating the concession agreement with the then contractor of the delayed 136-km Kundli-Manesar-Palwal (KMP) expressway project.
The project was supposed to be commercially functional in July 2009. However, due to the inefficiency of the contractor it has got delayed by over six years.
The project, which was first allotted to M/s KMP Expressways Ltd, the project contractor, during the Congress rule had got derailed as it was mired in sticky legal and financial complications. Looking for a “bail out”, the previous government decided to go beyond the provisions of the concession agreement, thereby terminating the concession agreement with mutual consent and giving the project to a new company.
As part of the “bail-out” plan, the previous government had also decided the termination payment of about Rs 1,300 crore to be paid to M/s KMP Expressways and the project lenders by the new company. The Rs 1,300 crore fixed as termination payment was on account of the work done on the delayed project by the then contractor.
‘Project cost less’
The BJP government, however, rejected the Rs 1,300-crore payment, saying the project cost was less than that.
“The termination payment of Rs 1,300 crore approved by the previous government needs to be revisited in light of three different evaluations done. More importantly the total value of work as per the concession agreement could not be more than the estimated cost of Rs 1,200 crore as the concessionaire was allowed to recover only this much towards the cost of construction,’’ said the minutes of a meeting held to review the project.
A committee of officers, which scrutinised the work done and amount to be paid as settlement money to the contractor and lenders, later said the Rs 1,300-crore settlement proposal submitted by the previous regime before the Environment Pollution (Prevention and Control) Authority was invalid.
The project cost at the time of bidding was Rs 1,200 crore and KMP Expressways Ltd had submitted an unqualified bid accepting the amount of work order. The state government had also filed an affidavit to this effect in the Supreme Court, which was monitoring the implementation of the project.
An arbitration exercise between HSIIDC and the previous contractor, however, is on to settle the financial dispute.
The Committee also made adverse remarks on the contractor and the consultants, raising doubts over the methodology adopted for determining the correct amount for work done and amount fixed for termination, terming them as inappropriate.