IDBI Bank might come to the rescue of IDFC consortium

Operator could be asked to pay Rs 367 cr trouble after unauthorised debt rejig

The Union government is working on a plan to get IDBI Bank into the controversial Delhi-Gurgaon Expressway project, to save the lenders involved from trouble in case of cancellation of the contract.

The government plans to put in place a mechanism to bail out the IDFC-led consortium, which had invested Rs 1,600 crore as debt in the project.

The project was a landmark one because the government got for the first time a premium from the operator, instead of giving any money for construction. But it has been in the midst of a controversy since the National Highways Authority of India (NHAI) served a termination notice on project operator Delhi-Gurgaon Super Connectivity Ltd (DGSCL) in January.

RISK FACTOR
Lender	Exposure (Rs cr)
IDFC	550
Bank of India	500
Punjab National Bank	400
Oriental Bank of Commerce	100
State Bank of Bikaner and Jaipur	50
Rs 1,175 cr Final cost of Delhi-Gurgaon Expressway, original cost Rs 548 cr Jan 2002 JP DSC Ventures awarded project, with contractors paying NHAI Rs 61 cr June 2004 DS Construction buys out Jaypee group equity Jan 2008 Project opened to traffic with a three-year delay Jan 2009 DGSCL seeks NHAI approval for debt refinancing  July 2009 NHAI gives conditional clearance but DGSCL does not incorporate changes Sept 2010 DGSCL takes Rs 1,600-crore loan from IDFC-led consortium without NHAI nod; NHAI issued termination notice for loan refinancing and for neglecting commuter interest 2.4 lakh Passenger car units use the expressway a day
Source: NHAI

IDFC, Bank of India, Punjab National Bank, Oriental Bank of Commerce and State Bank of Bikaner and Jaipur have exposure of Rs 1,600 crore to the project.

“The government would have taken over the project but for the lenders, who would have been left handling public deposits without any returns from the project,” said a senior government official.

According to NHAI, project operator DGSCL, a special purpose vehicle floated by DS Construction, had gone in for refinancing the original debt of Rs 383.2 crore from Hudco and other lenders without its approval.

NHAI had in 2002 awarded the contract for building and operating the expressway on National Highway 8 to the company and the Jaypee group. The contract was given on a premium of Rs 61 crore and is scheduled to end in January 2023. Jaypee had exited the project in 2004.

When approached for a confirmation, R M Malla, chairman of IDBI Bank, did not deny the bank was in discussions with the government. But in an email response, he said the bank “does not have any exposure” to the project.

A spokesperson for DGSCL said there was no discussion on restructuring the debt. “We are at present working closely with NHAI and the lenders to implement the various points in the memorandum of understanding set under the settlement agreement. We have not received any communication from the government regarding the takeover of this project,” the spokesperson said in an email response.

The government official, however, said the company would be asked to pay Rs 367 crore to the IDFC-led consortium under a Delhi High Court-monitored tripartite agreement, signed by the lenders, NHAI and the company this September. The exit route for IDFC is still in the making, said the official, adding the operator will have to agree to it, as it had violated the terms of the contract with the government. Toll revenue from the project would directly go to the lenders through an escrow account, which is already operational.

Besides, the agreement signed with the government in 2002 provides that lenders would also have access to dues payable by NHAI in the event of termination of the contract.