Lenders may take a Rs 1,400-cr haircut on Gurgaon Expressway

NHAI to pay only Rs 175-200 cr as it takes over from concessionaire

Lenders to the Delhi-Gurgaon Expressway, a showcase public-private partnership (PPP) road project, might be forced to take a haircut of more than Rs 1,400 crore (Rs 14 billion) when the government takes over from DS Construction, the concessionaire. The National Highways Authority of India (NHAI) has informed a consortium of banks, led by IDFC Bank, that  the authority would pay the lenders only Rs 175-200 crore (Rs 1.75-2 billion) if it takes over.

The consortium, which includes Punjab National Bank, Oriental Bank of Commerce and State Bank of Bikaner and Jaipur, besides IDFC, has an exposure of combined Rs 1,600 crore (Rs 16 billion) in the project. The decision would mean a hit of Rs 1,400 crore or more, said a government official. “IDFC-led consortium has agreed to the terms,” he confirmed.

NHAI had terminated the contract awarded to DS Construction earlier this year but the matter is sub judice at present, as the concessionaire had got a stay on the order from the Delhi high court. “The consortium is entitled to only Rs 175-200 crore according to the termination agreement. We have clearly told it about the decision. IDFC Bank, the lead lender has an exposure of close to Rs 500 crore (Rs 5 billion). It is followed by PNB (less than Rs 400 crore),” a senior NHAI official told Business Standard, asking not to be named as the matter was sub judice. An IDFC Bank spokesperson refused to comment.

The contract had been terminated after frequent complaints of inordinate delays at the toll plaza. NHAI had also found irregularities in the manner in which DS Construction raised loans from financial institutions without the authority’s permission.

The road transport & highways ministry and NHAI are also learnt to sought the attorney-general’s help in vacating the stay so that the project could be taken over at the earliest. NHAI had earlier backed a proposal to allow IDFC Bank to buy 74 per cent of the project’s equity from the concessionaire but the bank was not keen.

The government’s decision to take over followed this. TheDelhi-Gurgaon Expressway was considered a landmark project, as it was the first time the government had received a premium from the operator, and did not have to pay anything for construction. NHAI had awarded the build-operate-transfer (BOT) project to Jaypee DSC Ltd in 2002 but Jaypee Group exited the project in 2004.