Govt ready to relax norms for IL&FS' Zojila tunnel project in J&K
Firm was lowest bidder for Rs 48.99-bn tunnel, aimed at providing all-weather connectivity between Kashmir and Ladakh
 "The Zojila pass, at 11,578 feet on Srinagar-Kargil-Leh National Highway, remains closed during winters because of snowfall and avalanches")
The Zojila pass, at 11,578 feet on Srinagar-Kargil-Leh National Highway, remains closed during winters because of snowfall and avalanches
In an attempt to ease the process of project implementation for the troubled Infrastructure Leasing & Financial Services (IL&FS), the Union road ministry is ready to relax the stringent fund-mobilisation norm for the concessionaire for the Zojila tunnel project in Jammu & Kashmir.
According to the norms, the government releases 10 per cent of the total contract value to the concessionaire at the start of the project, against a bank guarantee 10 per cent of this advance payment. For instance, if the total cost of a project is Rs 50 billion, Rs 5 billion is released by the ministry against a bank guarantee of Rs 500 million, to be produced by the concessionaire.
“In the case of IL&FS, we are ready to relax the norms and give lower advance of 5 per cent, so that the required bank guarantee amount is lower. The remaining advance amount can be released to the contractor in tranches,” an official said.
The government is ready to make certain relaxations in the case of IL&FS, but it is up to the company whether or not it wants to execute the project, the official said, adding the work is yet to begin at the project site.
In July last year, IL&FS emerged the lowest bidder for the Rs 48.99-billion Zojila pass tunnel, with the goal of providing all-weather connectivity between the Kashmir Valley and Ladakh.
The Zojila pass is situated at an altitude of 11,578 feet on Srinagar-Kargil-Leh National Highway, which remains closed during winters (December to April) because of snowfall and avalanches cutting off the Leh-Ladakh region from the rest of Kashmir. Once completed, Zojila would be the country’s longest road tunnel, with strategic and socio-economic importance.
The civil construction cost of the project is Rs 48.99 billion and the total capital cost of the project is Rs 68.08 billion, which includes the cost towards land acquisition, resettlement and rehabilitation, and other pre-construction activities as well as maintenance and operation cost of the tunnel for four years.
In January this year, IL&FS received the letter of acceptance from the National Highways and Infrastructure Development Corporation, a wholly owned subsidiary of road ministry, for project construction.
Besides the Zojila tunnel project, IL&FS is battling some arbitration cases with the road ministry and the National Highways Authority of India (NHAI). The debt-laden company has even challenged some arbitration cases at higher courts over lower claim amount approved by the arbitration panel.
IL&FS has arbitration claims of around Rs 70 billion with the NHAI, which are under various stages of resolution.
ABOUT THE ZOJILA PROJECT