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Essar group in trouble over highway delay

A termination notice has been slapped on it for not completing two projects worth Rs 466 crore in Karnataka, reports M Rajendran.

india Updated: Jan 18, 2007 22:02 IST

The Essar group, currently in the thick of a takeover battle as a minority partner in mobile phone operator Hutchison Essar, is facing trouble on another front, with the National Highways Authority of India (NHAI) slapping a termination notice on it for not completing two projects worth Rs 466 crore in Karnataka.

A joint venture company between Essar and United Engineers of Malaysia (UEM) were awarded three projects in Karnataka in March 2002, with a target to complete it by August 2004. A 77-km stretch road was to be built by the JV Company to connect Chitradurga with Harihar on National Highway 4 and another 56-km stretch was to link Harsher with Haveri.

NHAI spokesman Bhupendra Kainthola confirmed the termination notice.
"The termination notice for the two out of the three projects of the Essar-UEM joint venture has been sent on Wednesday. We would not like to comment on the reason for their inability, but cash flow and poor site management were visible. In the last three months there was no activity on these two projects," he said.

An Essar spokesman offered no comment. "This is a matter between the employer and the contractor and we would not like to comment," he said.

Officials of the joint venture company were sent repeated reminders for the last two years.Union Transport Minister TR Baalu and department secretary Vijay Singh also held discussions on the issue early this month, the NHAI spokesman said.

A meeting was called on January 11 and the senior executives of UEM were offered the projects for completion within a year. However, they also refused, and the termination notice was sent to Essar on January 17.

NHAI has also terminated another contract amounting to Rs 30 crore involving the Uttar Pradesh State Bridge Corporation (UPBC) for not completing a bridge construction project on the Tapi river on the Ahmedabad-Mumbai stretch near Surat on NH 8.

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First Published: Jan 18, 2007 22:02 IST