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Last Updated : Nov 03, 2017 10:49 PM IST | Source: CNBC-TV18

NHAI terminates 20 road development contracts of infra companies citing default

The highway authority said that these companies have failed to fulfil the criteria and were unable to execute the projects awarded to them between 2015 and 2017.

Ashpreet Sethi

The National Highways Authority of India (NHAI) has terminated 20 road development contracts citing default. NHAI has also barred some major infra players from bidding for highway projects in the next 2-3 years for public-private partnership (PPP) projects and engineering, procurement, and construction (EPC) projects, which received major funding from the government.

The companies that are barred include L&T, Hindustan Construction Company (HCC), Essel Infra Projects, MBL Infra, JKM Infra, Madhucon Toll Highways, Supreme Infra, Transtroy India and others. These firms have been given time till November 6 to make representation before NHAI.

The regulator said that these companies have failed to fulfil the criteria and were unable to execute the projects awarded to them between 2015 and 2017. These companies won’t be able to compete for PPP, EPC, tolls and road ministry’s projects till 2019.

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L&T's joint venture with Ashoka Concessions has failed to execute the six-lane project in Maharashtra. HCC West Bengal project has been terminated and NHAI said that the company won’t be allowed to bid again. NHAI has terminated 20 contracts in total.

The news has come as a big setback for these infra companies which have been looking to bid for the government’s ambitious ‘Bharatmala’ project.

NHAI officials told CNBC-TV18, the list came out as a result of government looking at big steps to revive the stalled projects.

NHAI Chairman Deepak Kumar told Moneycontrol: "This news is false. These are the list of companies whose projects were terminated in the past. Not today. These were terminated in 2014, 2015 and 2016. Our tender document says that the projects which get terminated due to the fault of the company, then such companies are debarred from participating in any other tender."

NHAI has only "asked" these companies to make presentation as to whether they have received any judicial nod. That is, in case the companies took any legal action to come clean against the NHAI's list, then the company should produce the legal papers in front of the regulator.

"We have only asked them to show us their papers, if they have anything to prove the termination wrong. We have given them time till 6th November. NHAI will take decision on 7th, whether to continue with these companies or not. If they have nothing to say, we will then debar them. We will take decision only after their presentation," he said.

"As per RFP or MCA, if a project gets terminated, the concessionaire is liable to be debarred

Thus the list was put up only to ask them to give representations," he added.

L&T official spokesperson told Moneycontrol, “L&T IDPL, a subsidiary of L&T, terminated a concession for the Pimpalgaon Nashik Gonde project due to ‘force majeure’ events arising from law and order issues as per provisions of the Concession Agreement, after completing the Project.

In our opinion, the termination cannot be treated as a Concessionaire event of Default.

The matter is sub-judice as it is under Arbitration / Conciliation.

As per NHAI directions, the matter has been represented and a decision is awaited from them shortly."

HCC official spokesperson told Moneycontrol, "The NHAI had uploaded the list of 20 projects on October 30, 2017 on its website and it stands withdrawn from NHAI portal today after representation from concerned companies and industry bodies.

The HCC BOT project concerned, namely Raiganj Dalkhola Highways Ltd, has been delayed for 6 years due to land acquisition delays on account of NHAI. We feel that the action by NHAI is premature, especially considering since the alleged termination is undergoing an adjudication or conciliation process.

We are glad that overall list and thereby HCC’s name has been withdrawn”.

Jagannarayan Padmanabhan of Crisil Infrastructure Advisory told CNBC-TV18, such a strong step by NHAI will stop aggressive bidding by companies.

There are genuine cases too of projects not completed due to external factors, says Padmanabhan.

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First Published on Nov 3, 2017 09:25 pm
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