Reliance Infra arm awarded Rs2,950 cr over failed airport metro

12 May 2017


An arbitration tribunal has awarded Reliance Infrastructure subsidiary DAMEPL Rs2,782.33 crore, four years after it walked out of a concessionaire agreement with the Delhi Metro Rail Corporation (DMRC) regarding the Airport Express Line. The tribunal also awarded interest of 13.5 per cent a year as part of the termination payment by the DMRC.

''Delhi Airport Metro Express (DAMEPL), an associate of the company, has been awarded a compensation of Rs2,950 crore by a three member Arbitration Tribunal. The tribunal was constituted from a panel nominated by DMRC,'' Reliance Infrastructure said in a press release.

''Reliance Infrastructure participated in the PPP (public-private partnership) model in the Metro sector to lead the Metro movement in the country through PPP but unfortunately had to terminate the agreement. We welcome the award and hope it will encourage the private sector to participate in the nation-building process,'' it added.

Under government-approved guidelines issued by NITI Aayog, public sector undertakings are expected to pay 75 per cent of the award amount against a bank guarantee even if they want to challenge the award. Therefore, Reliance Infrastructure is expected to get Rs2,210 crore even if DMRC proposes to challenge the award, according to the statement.

The Metro will have to also pay DAMEPL operating expenses, taking the total amount to nearly Rs5,000 crore. The DMRC is likely to challenge the order, according to The Times of India citing sources.

The award was granted on the basis of the termination provisions in the concessionaire agreement. In effect, the arbitration tribunal has held the termination by DAMEPL to be valid.

Besides the termination payment and the interest, to be calculated from 7 August 2013 to date, an amount of Rs147.52 crore will also have to be paid to DAMEPL with an interest rate of 11 per cent per annum. The total amount that Delhi Metro Rail Corporation's (DMRC) will have to pay, according to the arbitration tribunal, is between Rs 4,800-4,900 crore.

Sources in DAMEPL told TOI the award comes as a vindication of its stand on the issue of closure of the line. "We were happy to run the line. But the civil structure was defective and posed a risk to people and property. In such a situation, it was better to walk out of the agreement," said the source.

Delhi Metro spokesman Anuj Dayal in a statement said, "We are studying the award given by the arbitrators in the Airport Express line case and will decide our further course of action in the matter after due deliberation."

The Airport Express line project was the first public private partnership (PPP) project undertaken in the country, but was dogged by controversy from the beginning, with deadlines being missed.

The then Delhi Metro head Dr E Sreedharan had to step in and ensure a launch in February 2011. But the line never really took off, with the steep fares chargeable to passengers being another contentious issue.

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