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Reliance Infrastructure compensation hits Delhi Metro Rail Corporation

DMRC, co-owned by the Centre and the Delhi govt, suffered a loss of Rs 708.45 crore in 2015-16

Jyoti Mukul  |  New Delhi 

Delhi Metro, DMRC

The that the Rail Corporation (DMRC) was forced to take over in 2013 from a unit of may end up burning a massive hole in its books and raise questions on its ability to add new lines.

DMRC, co-owned by the Centre and the Delhi government, suffered a loss of Rs 708.45 crore in 2015-16. Its revenue stood at Rs 4,344.25 crore during the period.

Last week, Delhi Airport Metro Express Pvt Ltd, a subsidiary of Reliance Infrastructure, had received an arbitration award of Rs 2,950 crore for termination of concession agreements for the metro express project. The total compensation, including the interest, would mount up to Rs 4,670 crore. This could pose a stumbling block for to add more routes at a time phase-III is yet to be fully operational and planning for phase-IV is on.

With this amount, is looking to pay off a substantial portion of its debt. On a consolidated basis, the Anil Ambani-promoted firm had a debt of Rs 14,444.28 crore at the end of March 2016.

is considering moving the to contest the arbitration award. According to a spokesperson, “In connection with the arbitration award issued on May 11, 2017, has decided to seek legal remedies under the Arbitration Act, 1996, and decided to file an objection petition before High Court of Delhi under section 34 of the Act.”

is of the opinion that the termination notice issued by Delhi Airport Metro Express when it wanted to exit the Metro line was legally untenable and was against the provisions of the agreement signed between and

said Delhi Airport Metro Express had abandoned the airport line on June 30, 2013. took over the project in public interest. Today, it is carrying about four times the traffic on this line by adopting various consumer-friendly measures, including fare cuts. “Now, the ridership is about 40,000, the same as predicted when the contract was given out to Reliance,” said a official.

Tricky Track
The 22.7-km line built at Rs 5,800 crore links New Delhi Railway Station to Terminal 3 of Delhi airport
built the civil infrastructure and spent over half of the Rs 5,700-crore project cost
Delhi Airport Metro Express (DAMEPL) brought in rolling stock and was supposed to run the line for 30 years
R-Infra’s DAMEPL on May 17, 2012, informed about defects in civil structures
In July 2012, line is completely shut down after DAMEPL slowed down the service citing safety
On June 27, 2013, DAMEPL informs it will stop operating the line from the night of June 30
In October 2012, arbitration proceedings begin between DAMEPL and DMRC
takes charge of the line in July 2013; It is asked to pay off debt under contract
On May 11, 2017, DAMEPL wins Rs 2,950 crore arbitration claim on DMRC
DAMEPL files a petition in the seeking early payment of Rs 3,500 crore of the total arbitration award
Reliance Infrastructure, however, claims the award has been granted on the basis of termination provisions of the concession agreement where the arbitration tribunal has held termination by Delhi Airport Metro Express as valid. “The covers damage as a result of breach by of its obligations under the concession agreement and material adverse effect on the ability of Delhi Airport Metro Express to perform its obligations under the agreement,” said.

claimed the guidelines approved by Cabinet Committee on Economic Affairs and issued by Niti Aayog on September 5, 2016, public sector units are expected to pay 75 per cent of the award amount against bank guarantee even if they propose to challenge the arbitral award. Therefore, expects to get Rs 2,210 crore even if proposes to challenge the award.

A spokesperson said the company had participated in a PPP (purchasing power parity) model to lead the metro movement in the country, but had to terminate the agreement. "We welcome the award and hope it will encourage the private sector to participate in the nation-building process."
 
The three-member arbitration tribunal, formed out of a nominated panel according to the concession agreement in September 2013, gave its award in May 2017 after hearing the case for about three and half years. The tribunal heard the submission made by both the parties and after detailed proceedings in 68 hearings; it has issued its final order.

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