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Govt terminates IL&FS' Zojila tunnel contract, mulls re-tender

The government has set up a committee to look at all the projects that are owned by IL&FS and work on their revival strategy

January 18, 2019 / 01:40 PM IST

The union ministry of road transport and highways has decided to re-tender Jammu and Kashmir based Zojila tunnel project, originally bagged by beleaguered IL&FS to start the stuck project, Times of India reported.

According to the report, the government has set up a committee to look at all the projects that are owned by IL&FS and work on their revival strategy. There are close to 10 projects that are in focus. These include Zojila tunnel, Z-Morh, Gurgaon metro, Chikali-Tharod national highway, Amravati-Chikali national highway and Kiratpur-Ner Chowk national highway.

The ministry has given more weight to 14.2 km long Zojila tunnel project due to its strategic location in J&K. Construction work on it has been stuck since May 2018, after which National Highways Authority of India (NHAI) “asked National Highways and Infrastructure Development Corporation (NHIDCL) to encash the security amount of Rs 122 crore submitted by IL&FS”.

NHIDCL, a subsidiary of NHAI, is responsible for constructing national highways in hilly regions and north-east India.

“It’s up to the government to decide when we should go for fresh bidding... We are ready to float tenders even by this month end,” a senior official told the daily, on condition of anonymity.


The government is said to have terminated the company’s contract to work on the Rs 6,809 crore tunnel.

Second most import project, Z-Morh, is also being considered to be revived and re-tendered. The report said that NHAI has served termination notice for the same.

Work on the 6-kilometer long tunnel has only been completed up to 28 percent and has been stuck since July 2018.

“As per the norm if the contract is terminated due to defaults on the part of IL&FS, the company won’t get any amount from NHIDCL. In such a situation, both IL&FS and the lenders will lose their entire investment,” the report said.

IL&FS has reported consistent default on debt-payment since September 2018 and has an overall debt obligation of approximately Rs 91,000 crore.
Moneycontrol News
first published: Jan 18, 2019 01:40 pm

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