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DMRC, Reliance arm spar over penalty

BS Reporter  |  New Delhi 

Tussle over delay in the commissioning of the showcase Airport Express Line.

Delhi Metro Rail Corporation (DMRC) and Delhi Airport Express Pvt Ltd (DAMEPL), a subsidiary of Reliance Infrastructure, seem to be heading for a showdown over a penalty imposed on the latter for a delay in the commissioning of the showcase Airport Express Line.

The line had failed to get the mandatory safety clearances from the Commissioner of Metro Rail Safety (CMRS) earlier this week. DMRC had slapped a penalty of Rs 11.25 crore on the Reliance subsidiary, the concessionaire, as it failed to meet the deadline of August 31 to start operations on the line.

“They have defaulted and the concession agreement provides for damages,” said a senior DMRC official. According to the concession agreement signed between the two parties, DAMEPL was required to make the Airport Express Line operational by July.31. In view of the slow progress, DMRC provided an extension of time till August 31.

The penalty has been imposed, through a letter sent by DMRC on 30 September, for the period between September 1 and 30 this year and the concessionaire has been given three days to submit it.

DAMEPL, however, has objected to the imposition of Liquidity Damage (LD), terming it unacceptable. “We requested DMRC to provide us a commensurate extension of time but DMRC only provided an extension of one month. The levy of LD by DMRC on this account, therefore, is incorrect and unacceptable to us. We will take up the matter suitably with DMRC,” a DAMEPL spokesperson said in an e-mail reply to a questionnaire by Business Standard.

The company, in fact, holds DMRC responsible for the delay. “DMRC was supposed to complete the civil structures and other works as per the dates stipulated in the Concession Agreement. However, DMRC severely delayed their completion works,” the spokesperson added in the reply.

According to the agreement, DMRC had to construct the civil structures for the line, being implemented in the Public Private Partnership (PPP) model, following which the concessionaire, DAMEPL, was to get the line ready for operations.

The CMRS had inspected the Airport Express Line on two days earlier this week and had asked for certain clarifications regarding “deficiencies” observed in the line. DMRC had later forwarded the clarifications sought by CMRS to Reliance Infrastructure. “Speed trials also could not be conducted on this line so far by the concessionaire. DMRC has asked the concessionaire to urgently comply with the requirements of CMRS,” a statement issued by DMRC read.

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First Published: Sun, October 03 2010. 00:45 IST