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Road to nowhere

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

Written by Chitleen K Sethi | Chandigarh | Published: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 to HSIIDC saying there had been no deposits by the concessionaire in the account for 5-6 months. Until April this year,the penalty was Rs 23.52 crore.

“Regarding the payment of damages due to delay,as per the recent Chandigarh District Court order of April 6,2013,the court has directed HSIIDC not to take any penal action against the concessionaire,” the KMP Expressway Ltd spokesperson said.

HSIIDC has challenged this order in the high court and the case comes up for hearing on July 31. “We are now looking at the other options available to us in the agreement to ensure the project is completed,” said Tarun Bajaj,MD,HSIIDC.

The company is facing problems with its lenders too. According to the appraisal report of debt syndicator SBI Caps,Rs 1,149 crore of the total project cost is debt and Rs 766 crore equity. KMP tied up with at least 12 banks for loans and they are said to have released almost 85 per cent of the Rs 1,1,49 crore.

A joint meeting of the lenders on May 18 “expressed serious concern about the inordinate delay in implementation of the project,non-infusion of matching equity and delay in the resolution of issues with State Bank of India”.

“…Further disbursement of funds shall be considered by the lenders only after the company brings its matching equity contribution. The same,however,shall be subject to a confirmation from HSIIDC that the concession agreement is still in force,the same shall not be terminated in near future and that suitable extension in the construction period…shall be considered in due course,” IDBI wrote to KMP on May 24. “You are therefore advised to ensure equity infusion (including the existing shortfall of Rs 65 crore) within one month’s time,either from your own sources or by induction of a resourceful strategic investor,” IDBI added.

The company,however,claims that there is no mention of the one-month deadline.

“As a matter of fact,another high-level joint lenders’ meet took place recently in Mumbai where the lenders have appreciated the concerns and are supporting the project. Different options of funding have been discussed which should soon be implemented in the interest of the project,” the KMP spokesperson said.

Sources,however,said that the Mumbai meeting of lenders told KMP to first infuse Rs 25 crore as equity within a month before the banks resume funding.

A monitoring committee constituted by the Supreme Court under the chairmanship of the secretary,Ministry of Road Transport and Highways,is monitoring the progress of this project (western peripheral expressway) as well as an eastern peripheral expressway.

The committee is being assisted by the EPCA,which filed an application the Supreme Court in November 2012 petitioning that issues concerning the western and eastern expressways be heard only by the Supreme Court. “The prayer is with the Supreme Court but no date has been fixed for hearing the case,” said Bhure Lal.

But the concessionaire feels differently about getting into litigation. “Since there is some disagreement on the change of scope costs,the arbitration clause has been invoked so that there can be a speedy agreement on the amount of funds payable to the concessionaire due to the change of scope of the project. A fast-track arbitration settlement could actually help in the progress of the project,” said the KMP spokesperson.

HSIIDC agreed some changes were made in the scope of the project but said they could not have caused the kind of delays the project has suffered.

The priority stretch

The stretch between Manesar and Palwal is almost 85 per cent complete. All 83 major structures planned for this stretch are ready and connected to the main carriageway. And most of it is motorable,except for a 1-km patch.

The company claims this 1 km in Nuh cannot be built as the land is not free of encumbrances. “There is an old building on the toe of the embankment which the HSIIDC is trying to acquire and hand over to us. As the toe falls on the main carriageway,this directly affects construction work. Since the road passes through tough terrain on this section comprising hills and slopes,there is no option of a bypass at this point. This is causing the current delay and once this land is made available to us,we would need a month to build the road in this section and another two months to lay the top layer for the entire priority stretch and complete it,” said a KMP spokesperson.

HSIIDC said the land was free of encumbrances and a small room in the building that was causing the obstruction was demolished months ago. “…The land of the area between km 102 and km 103 has already been handed over since the start of the project. There was only one small room in the toe of the embankment in the way of the expressway which was to be removed. This structure was not obstructing the construction of the carriageways and the same could have been completed without encumbrance. However,this small room has already (been) demolished,” HSIIDC said in a letter to KMP on February 26.

Mud tracks alternate with breezy rides

Manesar to Kundli (83 km)

About 8 km from the Manesar toll complex,the KMP Expressway crosses NH-8. There are signs that a flyover was being built here and an elevated mud-track runs on both sides of the intersection. Fruit-sellers from Panchgaon village claim the tracks came up some 5-6 years ago.

A few metres ahead in the direction of Kundli,one ramp that was apparently planned to connect to the flyover stops abruptly near a village temple and the village stands between the ramp and the main elevated track.

The priest said the temple had not received any notice that it was in the expressway zone. A resident of nearby Eakharpur village said the construction company had told them more than five years ago that their house would be razed as it fell in the expressway zone and they would be rehabilitated elsewhere but they have since not returned.

There is no sign of a road for about 2 km on the mud-track from Eakharpur,then there is one for about 1.5 km,after which the mud-track resumes .

The 20-km stretch until Pataudi Road had only this 1.5 km of constructed road. There are about six underpasses along the mud-track in various states of completion.

Villagers of Kharkhari near Jamalpur said they haven’t seen the concessionaire actively pursuing construction on the Manesar-Kundli side for about two years. No labourers or construction trucks/tractors were seen.

An official at KMP’s Manesar camp said work had stopped at the location and blamed much of the delay on land acquisition problems.

Manesar to Palwal (53 km)

The road is poorly built and bumpy at the start but becomes smooth and easily motorable after what is supposed to be the Manesar toll plaza. The wide road is divided into two lanes — one for Manesar-bound vehicles and the other for Palwal-bound vehicles.

There is a huge roadblock after around 20 km. The road cuts through the Aravallis and a rocky stretch,a little over 1 km,in Mewat district drops dangerously and abruptly,making it difficult for vehicles to pass.

Also,the KMP Expressway runs into a 150-year-old mosque here called the ‘Jharnewaala masjid’. The cleric and villagers did not agree to razing of the mosque when the concessionaire approached them in 2009. After some legal wrangling,the road was supposed to be realigned but work has obviously been suspended and the stretch is filled with rocks and earth.

After the Aravalli roadblock,the expressway returns to being a smooth road for a little below 30 km until the incomplete Palwal toll plaza. Three kilometres after the toll plaza,the road hits a dead-end. The expressway is yet to be connected to NH-2,the Delhi-Faridabad-Agra expressway.

There are no signs of service roads on either side of the entire 70-odd-km stretch surveyed by The Indian Express.

Missed deadlines

Jan 31,2006

Concession agreement for 23 years 9 months including 3 years’ construction period,with commercial operation date set for July 29,2009

Nov 2009 & Dec 2010

Original deadlines for

Manesar-Palwal stretch and

complete expressway respectively

Feb & June 2011

Revised deadlines for Manesar-Palwal stretch and complete expressway

April & Nov 2011

Deadlines reset again

August 20,2011

New deadline for Manesar-Palwal

March & Dec 2012

Next deadlines for Manesar-Palwal stretch and expressway

Sept 30,2012,& May 31,2013

Last deadlines for stretch and e’way

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