Road to nowhere

The delays,funding controversies and legal wrangles that The KMP Expressway has run into

Written by Chitleen K Sethi | Chandigarh | Published on:June 17, 2013 1:51 am

The 136-km Kundli-Manesar-Palwa Expressway was considered among Haryana’s most prestigious infrastructure projects. Having overshot its completion deadline by four years,it has turned into a major embarrassment.

The expressway was meant to allow traffic that now takes various highways (see map) to bypass the capital. But with the Rs-1,915-crore project getting mired in controversy,funding problems and allegations of wrongdoing,the Haryana government is preparing to replace the the company executing it,DS Construction Ltd.

When the Haryana State Industrial Infrastructure Development Corporation and DS Construction signed an agreement in 2006 and formed a special purpose vehicle called KMP Expressway Ltd for the build-operate-transfer project,the two sides had agreed the project would be ready for commercial operation from July 29,2009.

With the project nowhere near completion even three years after its deadline,Haryana Chief Minister Bhupinder Singh Hooda,Delhi Chief Minister Sheila Dixit and the chairman of the Environment Pollution Control Authority (EPCA) assisting a Supreme Court panel monitoring the project,Bhure Lal,met DSC officials in June last year and set May 31,2013,as the new deadline. But KMP missed that deadline too,with the project only 68 per cent complete and work almost at a standstill.

While the Haryana government is penalising DSC for the delay,the company has taken HSIIDC to arbitration and claimed damages of Rs 900 crore. Lenders to the project have alleged DSC has stopped infusing equity while Bhure Lal has alleged the delays by DSC are deliberate as the company has financial interests in the Delhi-Gurgaon toll plaza and does not want the KMP Expressway to hit that business.

The company denies the allegation and blames constant changes in the scope of work by HSIIDC for the delays. “In the beginning,the project was delayed by 18 months due to litigation by one of the consortium partners. The project got further delayed in getting certain clearances and approvals from specific authorities. In addition,there were delays in getting the final design-change approvals for several major and minor structures that the client wanted to be done along the expressway which led to a huge change of scope of work for the project,” said a KMP Expressway Ltd spokesperson.

“A lot of progress on the change of scope has been achieved by the concessionaire. We have provided the full detailed break-up of the change of scope of work along with the costs to the client. The approvals for the change of scope claims are still awaited and funds are yet to be released to the concessionaire,which is causing some delay in the project,” the spokesperson added.

HSIIDC served the company show-cause notices in April last year to explain the delay and in July imposed damages at 0.01 per cent of the total project cost per week with effect from July 30,2009,until completion. The concessionaire was asked to deposit the penalty within 15 days of the date of the notice with interest,which it never did.

Early this year,HSIIDC tried to withdraw the penal amount of Rs 17.88 crore from a joint escrow account of the concessionaire and the lead lender,IDBI bank. But IDBI wrote back …continued »

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