KMP E-WAY DELAY: BANKS THREATEN ACTION

KMP e-way delay: Banks threaten action

GURGAON, 2011-08-30: The KMP Expressway project seems to be heading for bigger trouble with the latest August-end deadline set to be missed again. The consortium of 11 banks for this project has written to the Haryana government that action might be initiated against the concessionaire if it doesn't expedite the work. According to the concessionaire, the 53-km "priority stretch" between Manesar and Palwal will now be completed by November. This is the 12th deadline for the first stretch. However, looking at the progress, officials in the Haryana government feel that even if construction is put in top gear, the first phase might get completed only by December. The unprecedented delays and innumerable missed deadlines despite the state and the client - the Haryana State Industrial and Infrastructure Development Corporation (HSIIDC) - extending all possible support have caused worry for the bankers. It is equally bad for the private developer - KMP Expressway Ltd, a subsidiary of DSC Ltd. According to estimates, the concessionaire is incurring a daily loss of several lakhs on account of interest during construction (IDC). Moreover, the delays could push the project cost to Rs 3,000 crore by 2013. The present cost is about Rs 2,000 crore. The concessionaire is also facing problems on the ground because of issues related to non-payment of bills to its contractors and their sub-contractors for a few months now. Also, several minor and major structures are yet to be completed all along the 53-km stretch. About the reasons behind the delays, the concessionaire said that these were primarily due to "certain clearances from third parties like the IOCL for pipeline clearances, local agitation from villagers wanting additional structures (beyond the original scope), finalization of the change of scope items and the heavy monsoons". It also said, "With all the clearances more or less under control and the monsoon abating we are quite confident of making the stretch between Manesar and Palwal trafficable by end October/ early November..."According to DSC Ltd, delays will only adversely affect their revenues since the project had been awarded to them on a build-operate-transfer (BOT) basis for 33 years. "As a concessionaire operating on a BOT basis it is in our interest that the project gets completed on time or with minimum delay, as delays lead to additional fixed overheads, interest on loans, depreciation of plant and equipment and loss of toll revenues. Due to certain issues which are being solved there is a slight delay in starting the stretch between Manesar and Palwal," said a spokesperson.According to the Gurgaon deputy commissioner, P C Meena, the concessionaire has promised speedy action in the coming days. "We are keeping a tab on their promised progress. The district administration has decided to write to the state to initiate strict action if they fail to live up to the expectations," said Meena. The project has been planned on a unique and first-of-its kind closed-loop tolling system, wherein the user pays toll as per the distance used/ covered on the expressway. The toll rates fixed in June 2010 show that while cars would have to pay about Rs 0.75/km, light motor vehicles would pay Rs 1.25/km. Light commercial vehicles would be charged Rs 2.60/km and multi-axle vehicles including buses and trucks would have to pay Rs 4.15/ km. The concessionaire said that the toll rates would be fixed only at the time of completion. This could, in other terms, mean that in order to incur losses, the prices could be escalated (according to NHAI rates) to cover the time lost in completion by the concessionaire.