Khed-Sinnar Expressway: NHAI Pays Over Rs 891 crore To IL&FS As Termination Compensation For Road Project

The National Highways Authority of India (NHAI) has paid over Rs 891 crore to Infrastructure Leasing & Financial Services (IL&FS) as compensation for termination of a road project Khed-Sinnar Expressway that forms part of the Delhi-Mumbai industrial corridor (DMIC), an Economic Times report said on Wednesday (8 June).

With this compensation, the total debt that gets addressed stands at Rs 1,400 crore and the project gets handed over to the NHAI.

Khed-Sinnar Expressway

The 138-km long Khed - Sinnar section of NH-50 is a part of the DMIC and is the main connectivity route between North and South India. It is also one arm of the Mumbai – Nashik – Pune golden triangle. It passes through three districts in the state of Maharashtra viz. Pune, Ahmednagar and Nashik.

The project highway passes through major towns of Rajguru Nagar, Manchar, Kalamb and Narayangaon in Pune district; Bote, Ghargaon and Sangamner in Ahmednagar district; Nandur Shingote in Nashik district and the end point is at Sinnar in Nashik.

The Khed-Sinnar Expressway (KSEL) is an under-construction project involving widening of the Khed–Sinnar section to four lanes. The project was awarded to IL&FS Transportation Networks Ltd (ITNL), an IL&FS subsidiary, in 2013, on Design, Build, Finance, Operate and Transfer (DBFOT) Basis with a 20-year concession ending in 2033. The key lenders to the project include IDBI, IFCL and Yes Bank.

2019 Guidelines

The Ministry of Road Transport and Highways (MoRTH) in March 2019 formulated a set of guidelines for resolution of incomplete or stalled projects for various reasons. Under this, authorities would be able to foreclose the project's concession agreement and pay a compensation based on value of work done or 90 per cent of debt due, whichever is lower. The closure of the KSEL claims made by the crisis-hit infrastructure financier is part of the same guideline.

ITNL, as part of its strategy, has been engaging with MoRTH, NHAI and NHIDCL for settlement of claims relating to incomplete and terminated projects as well as compensation claims filed in respect of certain operational projects.

“These claims settlements are being pursued and finalised by the authorities as per the guidelines issued by MoRTH in March 2019 for resolution of stuck projects and which provide parameters for agencies to foreclose the concession agreement and pay compensation” said a Company official.

Settled Projects

IL&FS has been monetising its assets to manage its debt obligations since its failure to meet repayment obligations in September 2018 had triggered a liquidity squeeze that gripped India’s non-banking finance sector.

IL&FS Group, as part of its Debt Resolution framework approved by NCLAT, is following a multi-pronged strategy for its Road assets to address debt. The Group has plans to form InVIT for 12 Road projects, settle incomplete projects under MoRTH guidelines and monetize balance Road Assets to the highest bidder.

The group has claims of around Rs 3,200 crore from NHAI and MoRTH of which around Rs 2,700 crore have been received and additional Rs 500 crore is in final stages of settlement.

Fagne Songadh Expressway Ltd (FSEL), a 100 per cent subsidiary of ITNL, completed its settlement with NHAI under the new MoRTH policy on stuck up projects receiving an amount of Rs 707 crore.

Similarly, ITNL, on 31 March 2021 received a settlement amount of Rs 673 crore for Kiratpur Ner Chowk Expressway Limited (KNCEL) and Rs 20 crore towards claim for Chenani Nashri Tunnelway Limited (CNTL) - from NHAI.

Other IL&FS projects settled under claims and compensation by NHAI include: Jorabat Shillong Expressway (JSEL) (Rs 252 crore); Baleshwar Kharagpur Expressway Limited (BKEL) (Rs 8 crore); and ITNL Road Infrastructure Development Company (IRIDCL) (Rs 144 crore) that was settled by the Ministry of Road Transport and Highways.

The two projects where final settlement is in advance stages include Rs 300 crore for Srinagar Sonmarg Tunnelway and Rs 171 crore for Amravati Chikli Expressway.

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