Gurugram streetlights project firm rips up contract over payment delays

Energy Efficiency Services Limited (EESL) has terminated its agreement with the Municipal Corporation of Gurugram (MCG) for a streetlights project due to non-payment of dues. EESL said MCG owes INR200m ($2.7m) with an additional late payment penalty of INR100m as of 31 July. EESL has installed 82,000 LED streetlights and 800 centrally controlled and monitoring systems in Gurugram, maintaining an uptime of over 98% despite payment defaults. MCG officials said they have raised concerns about the project with EESL and will make payment once the issues are resolved.

Energy Efficiency Services Limited (EESL), a joint venture of public sector undertakings (PSUs) under the Union power ministry, on Monday said that it has terminated its agreement with the Municipal Corporation of Gurugram (MCG) for the streetlights project in the city due to issues related to payment of dues by the civic body, the company’s officials said.

The company’s officials said that they installed 55,000 streetlights by August 2018 despite not receiving timely payments from the civic body. (HT Archive)

Officials of EESL said that despite “repeated demands and notices”, MCG failed to make the payment as per the agreement forcing the company to terminate the contract. The company said that the total outstanding payment from MCG stood at ₹20 crore, with an additional late payment interest penalty of ₹10 crore as of July 31 this year.

For the street lighting project in Gurugram, EESL said that a memorandum of understanding (MoU) was signed with MCG on October 10, 2017, on the condition that MCG would provide advance payments for the installation of LED streetlights.

“The company commenced work in March 2018 and completed the installation of 55,000 lights by August that year, despite payments not forthcoming from MCG. Despite our repeated requests, the payments have remained pending,” said Animesh Mishra, head of sales and public relations.

EESL had issued the termination notice to MCG on August 2, Mishra added.

“We have made payments out of our own pockets to the vendors as we get grants and funds from the central government and other agencies. But now the situation is such that we can’t continue the contract agreement,” Mishra said.

The company said that it has installed 82,000 LED streetlights and around 800 centrally controlled and monitoring systems (CCMS) in Gurugram. It also said that it has maintained uptime of over 98%, despite consistent payment defaults by MCG.

Asked about EESL’s allegations, MCG officials said that they have raised the issue of deficiencies in the project with the company.

“There are several issues which need to be resolved such as connecting the streetlights with command centres and other related issues. We have been assured that these matters will be resolved and accordingly the MCG will make payment on the progress of work,” MCG commissioner PC Meena said.

Meanwhile, residents said that the street lighting work carried out by EESL was not satisfactory. “There is a need to ensure that these streetlights work in an optimum manner,” said Praveen Yadav, president of the Ardee City residents’ welfare association (RWA).