Lenders seek govt help to get back dues from DMRC

Axis Bank-led consortium writes to urban development ministry for termination payment of Rs 1,700 crore

Senior lenders of a consortium led by Axis Bank have requested the urban development ministry's intervention to ensure Delhi Metro Rail Corporation (DMRC) make the termination payment for the airport metro project.

The lenders claim DMRC owes them Rs 1,700 crore, which is part of a loan they had extended for the troubled Delhi Airport Metro project.

In a letter written a few weeks ago, the lenders had said that in their representation to the government last year, they had given the opinion of senior advocate Gopal Subramanium, who had said DMRC should make the termination payment immediately. They argued that based on reports, the attorney general also seems to have recommended that DMRC should make the termination payment.

An Axis Bank spokesperson said as a policy, they do not comment on client-specific queries. A DMRC spokesperson said they had not received any communication from the urban development ministry in this matter. A detailed email to DMRC was unanswered till the time of going to press.

A consortium of 10 banks and financial institutions had lent Rs 2,100 crore for the project, which cost Rs 2,885 crore. The project was executed by Reliance Infrastructure through a special purpose vehicle, Delhi Airport Metro Express Private Ltd (DAMEPL).

According to the terms of the agreement between DMRC and DAMEPL, lenders are entitled to recover 100 per cent of the debt if the contract for operating the line is terminated by DMRC. The lenders were to get 80 per cent of the debt back if the contract was terminated by DAMEPL.

DAMEPL surrendered the project and DMRC took it over on July 1, 2013. DMRC has been operating the line and collecting revenues since then. However, DAMEPL and DMRC are locked in arbitration over termination of the concession agreement by the former.

DMRC had said the debt was payable only when the concession agreement was terminated. "DAMEPL has said the agreement is terminated, we are legally contesting that termination," a director on the DMRC board had then said.

The lenders, based on legal opinion, have said the central government and the Delhi government, responsible for executing the project, must insist on DMRC making the termination payment without delay.

They have claimed that with the termination of the agreement, the government was obligated to discharge its duties as part of the contract, irrespective of whether the "event of default" was attributable to the metro or the concessionaire. They have argued that a delay in the payment could have serious financial implications, as under the agreement the lenders were liable to be paid a penal interest equivalent to Rs 75 lakh a day.