DMRC's woes may continue after Delhi govt refuses bailout for RInfra dues

Sources say key meeting between DMRC, central officials and Delhi govt was inconclusive on lack of consensus on modalities to infuse equity of Rs 5,000 crore into DMRC

Delhi Metro Rail Corporation (DMRC) may be headed for a major embarrassment after Delhi government refused to bail the urban transporter out of its Rs 5,000-crore dues to a Reliance Infrastructure subsidiary over the metro’s airport line project, Business Standard has learnt.

People aware of the matter said that the crucial meeting last week between DMRC, central officials, and Delhi government remained inconclusive as the ministry of housing and urban affairs (MoHUA) and the Delhi government could not attain consensus on the modalities to infuse equity of Rs 5,000 crore into DMRC.

DMRC is a joint venture between the centre and the national capital’s government, each of whom own 50 per cent of the company. 

After the Supreme Court upheld an arbitral award in the airport metro case and ordered DMRC to pay Delhi Airport Metro Express Pvt Ltd (DAMEPL) Rs 4,500 crore in September 2021, the former has repeatedly failed to pay its dues, and incurring substantial interest burden due to its non-compliance.

The matter is currently being heard in Delhi High Court, where DMRC had sought extra time in the last hearing solely to conduct the above mentioned meeting last week. Sources said that the urban transporter, at the meeting, sought equity of Rs 2500 crore each from the state government and the Centre.

While MoHUA showed readiness to go forward with the plan after an approval from the finance ministry, Delhi government said that it has no budgetary provision to extend the required equity. Moreover, it also could not commit to providing a joint guarantee with the Centre for bank loans worth Rs 5000 crore which DMRC could raise to pay its dues.

Notably, DMRC had reached out to banks in June, seeking Rs 2,700 crore worth of loans to satisfy the arbitral award. Later, it informed the high court in an affidavit that the proposal was shelved as the company would fall into a debt trap if it were to depend on bank loans to pay DAMEPL’s dues. 

The two firms have been at loggerheads ever since DAMEPL pulled out of the Delhi Metro Airport Line operations due to safety issues arising from structural defects. An arbitral court, in 2017, had ruled in favour of the Reliance Infra firm, asking DMRC to pay DAMEPL the amount, which it had borrowed from 11 banks.