IDFC sees a revenue loss of 60% on Delhi-Gurgaon Expressway

A consortium of lenders led by IDFC might face a 60 per cent revenue loss in toll collection on the Delhi-Gurgaon expressway when it takes over the running of the expressway from the existing concessionaire.

To partially make up for the loss in revenue due to lifting of one toll gate on the Delhi-Gurgaon border, there could be a revision in the toll rates at the other toll gate, Kherki-Daula toll plaza. Currently, the Delhi-Gurgaon expressway has three toll gates — a six-lane toll plaza at the Indira Gandhi International Airport, an 18- lane toll plaza at Kherki Dhaula and a 32-lane toll plaza at Sirhaul.

The removal of toll gates at Sirhaul, where the concessionaire gets close to Rs 120 crore of Rs 198 crore collected annually (according to 2012-13 figures), may not help its cause since the consortium had lent close to Rs 1,600 crore to the project.

The remaining toll gates collectively contribute Rs 78 crore annually and the concession period for the project runs until 2023. “We have informed the road ministry that there should be a revision in toll rates since that will be the only toll gate available. The road ministry will take a decision once the consent order is passed and we are hoping that it happens,” said an official at the National Highways Authority of India (NHAI).

NHAI has asked the road ministry to re-notify the toll gates, said an official. IDFC is all set to take over the project after agreeing to a settlement with NHAI and DSC Limited, the existing majority shareholder in the special purpose vehicle (SPV), which runs the Delhi-Gurgaon expressway.

On Tuesday, after a settlement was reached between IDFC, NHAI and DSC Limited, the Delhi High Court was to pass a consent order regarding the same. However, in the wake of concerns raised by the Municipal Corporation of Delhi (MCD) over the collection of tax for commercial vehicles entering Delhi, the court will now hear the matter on Wednesday.

MCD had suggested the toll gates be retained to collect tax while NHAI said the toll gates need to be removed completely.

Last week, a tiff erupted between the lenders and concessionaire of the Delhi-Gurgaon expressway over the terms of liability payment, raising doubts on a speedy solution over ownership of the project. IDFC, the lead lender, had informed the court that it was not willing to take over the project since DSC Limited had not agreed to bear liabilities that could arise in the future.

NHAI had awarded the build-operate-transfer project to Jaypee DSC Ltd in 2002, but the Jaypee Group exited in 2004. While the concession period started in January 2003, the project was completed in 2008 and the company (now called Delhi Gurgaon Super Connectivity Ltd) owns the rights to operate the expressway and collect toll till 2023.

DGSCL, an SPV set up to undertake the landmark project, was initially funded by a consortium led by Hudco, which was later replaced by State Bank of India. The SPV then raised loans from IDFC and, in violation of its concession agreement, did not inform the government.

The IDFC-led consortium has Punjab National Bank, Oriental Bank of Commerce and State Bank of Bikaner and Jaipur. If NHAI had terminated the project, these lenders would have had to incur a combined loss of Rs 1,400 crore, as the highways authority would refund only Rs 175-200 crore. This prompted IDFC to start negotiations with the government.

Close to 600 employees of the project are likely to lose their jobs; IDFC is set to retain only 400 of the existing 1,000. The expressway was the first project to be awarded on a premium by the government, in 2002.

However, traffic congestion at the toll gates and allegations of financial mismanagement against DSC saw the case landing at the court. NHAI had sent a termination letter to the concessionaire in 2012 and maintained that the lenders could take over the project if it removed the toll plaza.