Delhi-Gurgaon Expressway saga may finally see light at end of tunnel

This, after a group of lenders led by IDFC informed the Delhi HC that it will remove one toll plaza

The Delhi-Gurgaon Expressway saga is likely to end next month after a group of lenders led by Infrastructure Development Finance Company (IDFC) informed the Delhi High Court that it will remove one toll plaza, making the travel between Delhi and Gurgaon free and providing relief to over 250,000 vehicles.

IDFC, on Monday, told the court in an affidavit that it would remove the toll gates and the court has set aside the next hearing for February 3 while asking NHAI and DSC Limited, the existing concessionaire, to study the proposal put forward by IDFC. The proposal is now expected to end the three year legal battle between IDFC, DSC Ltd and National Highways Authority of India (NHAI) over the government’s flagship PPP project.

The Delhi Gurgaon expressway was the first project to be awarded on premium by the government in 2002 but traffic congestion at the toll gates and allegations of financial mismanagement against DSC Limited saw the case landing at the court. NHAI had sent a termination letter to the concessionaire in 2012. NHAI has always maintained that the lenders can take over the project if it removes the toll plaza.  

DSC Ltd would, however, lose Rs 998 crore, which it had claimed from NHAI for change of scope of work. Change of scope of work is the additional work undertaken by a concessionaire while undertaking a road project. “Senior Lenders are agreeable to take on the obligations as set out in the Memorandum of Undertaking dated 18.09.2012 and restrict tolling to just the toll booth at km 42 , being understood that all rights and obligations of the parties including the Senior Lenders under the Concession Agreement as on date hereof and those passed on by the existing Concessionaire to the Selectee/Senior Lenders shall remain unaffected and the Selectee/Senior Lenders shall be entitled to all such rights”, the affidavit said.

According to a person close to the development, DS Construction is likely to agree to the conditions while officials at NHAI say that removing the toll gate was the only solution available to IDFC. “That was the only solution available to IDFC, or we would have terminated the contract,” an official at NHAI said. Last week, senior officials at NHAI had said that the authority was in favour of recognizing IDFC as a lender to the project. The government had so far not recognised the institution as an official lender.

NHAI and the roads ministry had so far not recognised IDFC as a lender because a change of lenders by Delhi-Gurgaon Super Connectivity Ltd (DGSCL) had not been approved. DGSCL had in 2010 replaced its authorised lender, State Bank of India (SBI), with an IDFC-led consortium, which has an exposure of Rs 1,600-crore in the project.

DGSCL, a special purpose vehicle (SPV) set up to undertake the landmark project, was initially funded by a consortium led by Hudco, which was later replaced by SBI. The SPV then raised loans from IDFC and, in violation of its concession agreement, did not inform the government. The IDFC-led consortium includes 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 from the project, as the highways authority would refund only Rs 175-200 crore. This prompted IDFC to start negotiations with the government.

NHAI had awarded the build-operate-transfer (BOT) project to Jaypee DSC Ltd in 2002 but Jaypee Group exited the project 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.