In a significant move, Delhi Government has refused to lend support to the Ministry of Urban Development (UDM) proposal to pay Rs 1,820 crore as termination fee to Reliance Infra promoted concessionaire Delhi Airport Metro Express Private limited (DAMEPl) regarding Airport Metro Express line mess.
In other words, Delhi Government has 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 Express line. However, the Ministry wants direction to Delhi Metro to take over the concessionaire’s debt from lenders and start servicing the debt. The total cost of the project was Rs 5,000 crore.
Insiders told The Pioneer that Transport Department of Delhi Government has sent a letter to Ministry of Urban Development, refusing to support its proposal to pay Rs 1,820 crore as termination fee to DAMEPl for the Airport Metro line. “In a letter to Secretary (Urban Development), Delhi Government has made it clear that it cannot support the Urban Development Ministry’s move to pay Rs 1,820 crore as termination fee to DAMEPl for Airport Metro Express line. Though, Delhi Government has not issued any reason for refusal,” insiders said.
If Delhi Government gives its consent to the proposal, it will have to give guarantee for borrowing on behalf of Delhi Metro. On the other hand, the UDM is in a hurry to bring the proposal before the Empowered Group of Ministers (EGoM) headed by Defence Minister AK Antony. Delhi Government’s move may delay the UDM process to pay termination fee as early as possible. Insiders say without Delhi Government’s view points, it would not be easy for the ministry to bring the proposal before the EGoM. They further added there was undue haste in clearing the payment to the concessionaire. As the bosses in the UDM fear that the same may be stalled if BJP Government comes to the power in Delhi.
A senior Delhi Government official said on the condition of anonymity since this is a huge amount hence, the Government will have to be careful in examining the proposal. “The Ministry’s proposal needs legal, financial and administrative examination. The dispute between Delhi Metro and DAMEPl has reached the arbitration and lets arbitration decide the issue,” 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. Earlier, Delhi Chief Secretary DM Spolia has written to Urban Development Secretary Dr Sudhir Krishna seeking more time to examine the proposal. “The matter has legal, financial and administrative issues. As you are aware that Delhi is now in the process of conducting elections to the legislative Assembly,” the letter said.
Following the direction of Prime Minister Office, the ministry has asked Delhi Government, Ministry of Home Affairs, Department of Economic Affairs, Department of Expenditure, Department of legal Affairs, Planning Commission and Department of Finance Services to give comments on this issue. The proposal said as per the Concessionaire Agreement, this termination payment is due within 30 days of demand being made by the concessionaire and failure of Delhi Metro shall attract penal interest at an annualised rate of two per cent of the period on delay on the unpaid amount.
“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 termination payment. 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.
The proposal also stated that Delhi Metro is investing its internal resources, to the tune of about Rs 2,400 crore, in fixed deposits for a period of about one year and earning only about 8-9 per cent in interest. In case, the loan taken in the short-term is at a high interest rate, the same can be retired early by a better term loan which Delhi Metro can avail later after the credit rating by CRISl and loan facilitation by Delhi Government through Government guarantee, since this project was taken up mainly on insistence of Delhi Government despite serious reservations of Ministry of Urban Development,” the proposal said.