The Arvind Kejriwal-led Delhi Government is up against another contentious issue — the impasse over payment of termination fee to Reliance Infra promoted concessionaire Delhi Airport Metro Express Private limited (DAMEPl) for Airport Metro Expressline mess. The Ministry of Urban Development (MoUD) has sought comments from the AAP Government to pay termination fee of Rs 1,820 crore to the erstwhile private operator of the high speed Metro corridor which broke ties with the Delhi Metro Rail Corporation (DMRC) last year.
The Ministry wants direction to Delhi Metro to take over the concessionaire’s debt from lenders and start servicing the debt. It is noteworthy that Delhi Government has already refused to give bank guarantee on behalf of Delhi Metro for borrowing the money from bank and financial institutions to pay termination fee for Airport Metro Expressline. The total cost of the project was Rs 5,800 crore. Interestingly, Kejriwal Government has recently ordered auditing of power discoms owned by the same company.
Top sources said that in a letter dated January 16 to Delhi Chief Secretary SK Srivastava, the Ministry of Urban Development has sought comments from the Delhi Government on the payment of termination fee of Rs 1,820 crore to Reliance Infra promoted concessionaire. The Ministry wants Delhi Government to give bank guarantee on behalf of Delhi Metro for borrowing the money from bank and financial institutions to pay termination fee for Airport Metro Expressline. The Ministry seems to be in hurry to put up the proposal before the Empowered Group of Ministers (EGoM) headed by Defence Minister AK Antony for approval.
According to official of Delhi Government, should Delhi Government give its consent to the proposal, it will have to give guarantee for borrowing on behalf of Delhi Metro. “The dispute between Delhi Metro and DAMEPl has reached arbitration and arbitration alone decides the issue,” the official said. The officer further stated that besides termination fee claim, the concessionaire is claiming Rs 1,200 crore towards several project-related work that will be decided in the arbitration.
“As per the present position, the Concessionaire Agreement stands terminated and the only issue to be settled is whether it is on DAMEPl’s default or on Delhi Metro’s default, as this will determine the exact amount of windup fee. Furthermore, the debt is neither being serviced by DAMEPl nor by Delhi Metro, which is certainly not a healthy state of affairs for the lenders, a consortium of banks and faith of lenders in the PPP mode of project implementation in general,” the Ministry said, in its proposal. It further stated that the minimum termination payment considering the best case scenario — termination on default by concessionaire — would also mean payment of Rs 1,820 crore while it might be Rs 2,274.13 crore if the termination is on default by Delhi Metro.
Reliance Infra, an equal partner in the country’s first public-private partnership (PPP) project, has recently pulled out after expressing its inability to run the Metro. This move by DAMEPl has left the DMRC holding a Rs 5,800 crore baby. It also raises strong questions on the viability of the PPP model.
Owing to the defective civil structures, the route had to be shut for six months in 2012. The problem in the civil structure was a big setback for the premium project. It was a huge dent in the DMRC’s reputation as an ‘efficient’ and ‘professional’ organisation which has a record of delivering projects before time. The inquiry report by the two-member committee comprising an additional member, the Railway Board and a senior official from the MoUD concluded that both the DMRC and Reliance Infra are equally to be blamed for the mess.
Interestingly, a supplementary note to the report prepared by D Diptivilasa, Additional Secretary, MoUD, pinned the blame on DMRC Chief Mangu Singh who was then Director (Works) and Keshav Verma, Director (Projects). It went on to name them for poor civil work and their failure to oversee the project. The matter was also referred to the Chief Vigilance Commission (CVC) in June when Sudhir Krishna, Secretary, MoUD, wrote a letter to the CVC, asking him to suggest appropriate action. This was after questions were raised on the MoUD’s jurisdiction over the DMRC, which is equally owned by the Delhi Government and the Central Government.