The KGP and KMP expressways were conceived together. KMP, beset by an over 10-year delay, is set to miss another deadline.
New Delhi, Chandigarh: India’s first access control highway – the Kundli-Ghaziabad-Palwal (KGP) Expressway — was thrown open to the public by Prime Minister Narendra Modi on May 27, after the National Highways Authority of India (NHAI) completed the project in what was termed as “record time”. But its twin — the Kundli-Manesar-Palwal (KMP) Expressway — is still far from ready, despite a delay of over a decade and persistent cost overruns.
The two expressways were designed to connect National Highway 1 and National Highway 2 from the eastern and western sides of New Delhi; since their start and end points are the same — Kundli and Palwal — they together were to form a complete ring road around the national capital.
The twin projects were conceived in 2004 to allow transit traffic to bypass Delhi, thus reducing vehicular pollution at the capital. They were part of recommendations by the Environment Pollution (Prevention & Control) Authority for the National Capital Region (EPCA), which had been directed to prepare a report on reducing pollution in the national capital, by the Supreme Court in April 2004. The EPCA put out its report in August 2004.
It was then decided that the Haryana State Industrial and Infrastructure Development Corporation (HSIIDC) will execute the KMP project while the NHAI will be the implementing agency for the KGP project. The work on both projects was to be monitored by a committee constituted by the Supreme Court in 2005. As per the initial proposal, construction on the projects would begin in 2007 and the highways were to be functional by mid-2009.
KMP — the delayed project
Between 2007 and 2015, the private sector showed no interest in taking up the KGP project. But when the NHAI finally contracted out the project and construction began in November 2015, the project was completed in a record 500 days, instead of the proposed 910 days.
In contrast, the construction of the KMP Expressway began in July 2006 with a completion deadline fixed for July 2009. But over a decade on, apart from the delay, the project has witnessed its original concessionaire (contractor) being removed, and has been plagued by cost overruns.
The concessionaire, D.S. Constructions, was removed after it failed to complete the project even by 2014. D.S. Constructions was part of KMP Expressway Ltd, a consortium of three companies — the other two being Madhucon Properties and UK-based Apollo Enterprises —that was awarded the project in 2005.
Once the concessionaire was removed, the project was divided into two portions and allotted afresh to different companies. While one segment of the road was inaugurated in April 2016, work on the second segment began in September 2016 and the new concessionaire, Essel Infraprojects, has time till February 2019 to finish the project.
Haryana chief minister Manohar Lal Khattar, however, last month announced that the KMP project would be completed by 30 June. Few though are ready to believe that the project would the meet new deadline given that the chief minister has been announcing a fresh deadline every six months. This despite the fact that state chief secretary D.S. Dhesi has personally assured the PMO that the construction would be complete by the end of this month.
Whose project is it anyway?
The KMP, a 136 kilometre six-lane access control highway project, has proved to be an embarrassment for successive governments in Haryana, particularly for the administration under two-term chief minister Bhupinder Singh Hooda.
It was initially awarded to the consortium headed by D.S. Constructions for Rs 1,915 crore but is currently being built at a cost of over Rs 4,000 crore.
Talking to ThePrint, Union Road, Transport and Highways secretary Yudhvir Singh Malik, who was the managing director of HSIIDC at the time, said it was a difficult decision to terminate the contract for D.S. Constructions.
“It was a non-performing entity but we were also apprehensive in terminating the contract given that it gave the concessionaire an opportunity to seek huge claims,” he said.
After the BJP government took over at the Centre, Cabinet minister Nitin Gadkari announced, in November 2014, that the Centre was ready to take charge of building the expressway after the contract with D.S. Constructions was cancelled. In January 2015, the Supreme Court directed the state government to award the contract for the project to a new concessionaire within three months and on 29 March, 2015, the contract with D.S. Constructions was cancelled.
Since a large part of the Manesar-Palwal segment was already complete, it was decided to contract out the project in two separate bits. A joint venture of KCC Buildcon and Dilip Buildcon Ltd was tasked with the completion of the Manesar-Palwal segment and by June 2015, construction on this part of the expressway restarted. This section was thrown open in April 2016 by Gadkari.
For the remaining 83 km, tenders were invited on a fixed semi-annual annuities basis. Essel Infraprojects was the lowest bidder and was awarded the contract in July 2015. Prime Minister Modi laid the foundation stone for construction of the remaining segment in November.
Despite repeated reminders, emails sent to Essel Infraprojects remained unanswered.
What led to the delay?
When the project was allotted to the consortium, KMP Expressway Ltd, on 14 November, 2005, it was on the build-operate-transfer (BOT) mode; the completion date was fixed for 29 July, 2009. In January 2006, HSIIDC and KMP Expressway Ltd signed the concession agreement for 23 years and 9 months, including three years of construction period. Of the total cost, KMP Expressway Ltd tied up a debt of Rs 1,149 crore, through a consortium of 12 banks/financial institutions led by IDBI Ltd.
More than 98 per cent of the land had already been acquired by HSIIDC and was handed over to KMP Expressway Ltd, which began construction in July 2006. The execution of the project was divided into three packages of 45 km each. The confident concessionaire assured the government that by the time the Commonwealth Games would commence in Delhi in 2010, cars would be zipping on its expressway.
The project, however, started on an ominous note when one of the partners — Madhucon — dragged the two others to court, getting a stay on construction. By the time the matter was resolved, over eight months had passed. The company also floundered on financial closure, delaying it by six months.
In 2008, the HSIIDC upgraded the design of the project and decided to construct interchanges on all the four intersections where the expressway crossed national highways; earlier, flyovers were planned at these four points.
The company failed to keep the deadline of July 2009 citing the following reasons: Litigation with a project partner, change in the design and scope of work, pending clearances from forest and railways and litigation challenging land acquisition. The new deadline was fixed for December 2010.
But after several failed deadlines, the high-powered committee monitoring the project met in November 2011 and decided to impose a penalty under clause 15.4 of the concession agreement. The committee noted that the concessionaire had achieved physical progress of only 64 per cent by October 2011 and there had been a lag of about 36 per cent. A revised deadline for the project was fixed for December 31, 2012.
IDBI Bank wrote to Haryana saying that inordinate delay in the completion of the project was liable to attract Reserve Bank of India (RBI) provisions regarding classification of the project as a non-performing asset (NPA). The concessionaire was also blamed for not paying its sub-contractors for months.
The final chance was given to the concessionaire and a new timeline of 30 September, 2012, was set for the completion of the priority stretch and May 31, 2013, for complete construction.
But when the concessionaire missed the May 2013 deadline, no new targeted date for completion was set and Haryana began preparing the ground to cancel the contract. The former Congress government fixed Rs 1,300 crore for terminating the agreement with the concessionaire, which was subsequently challenged by the BJP government but it was delayed because of the approaching state elections in 2014.
Following this, the concessionaire went for arbitration against the decision when the Haryana government terminated the contract.
Current status
“The financial progress of the project is Rs 3,600 of the Rs 3,650 crore. Works are in various stages of completion on the over bridges,” said T. L. Satyaprakash, MD, HSIIDC.
Unlike the earlier concessionaire — KMP Expressway Limited — which was to transfer the project to the state after a toll collection period of 20 years and nine months, the new concessionaire will be paid a six monthly annuity of Rs 157.5 crore for 17 years (including 2.5 years of construction) by the HSIIDC. The government will in turn collect the toll. Also, unlike the one being constructed by KMP Expressway, it was decided that the new expressway would be a six-lane highway and not four-lane one.
According to the agreement between HSIIDC and Essel, the project has to be completed by February 2019. However, for the past two years, Khattar has been announcing various completion dates ahead of the schedule. The latest is June 30.
“The company intends to finish the project ahead of schedule because as an initiative they would get Rs 84 lakh per day for every day that they have ended the project before February 2019,” added Satyaprakash. “Seven toll plazas will be located on the entire stretch of the expressway. The toll amount has not been finalised as yet. We have called for tenders to run the tolls for three months to access the traffic before the toll amount decision is taken,” said Satyaprakash.