Delayed highway projects cause massive pile-up of claims, govt says large cases are from UPA days

There is a massive pile up of claims from highway developers, which in some cases is as high as 13 times the original project cost.

While the 17 cases mentioned in a Parliamentary committee report submitted on Thursday have pending claims of Rs 62,193 crore, the total claims of private developers now top Rs 1 lakh crore, sources told TOI. Even NHAI, the agency responsible for construction of highways, does not seem to be lagging behind. It has filed counter-claims of nearly Rs 50,000 crores on highway builders. In 17 projects, the NHAI’s counter-claim was nearly 31,000 crore.

The numbers come at a time when the government is seeking to reduce litigation and settle disputes in the highway sector as several road projects had been delayed due to disputes between developers and NHAI.

In its defence, the government is arguing that projects involving large claims pertain to the UPA days when those were bid out on public private partnership (PPP) mode.

According to the report, the private players have raised the claims on ground of delay in declaration of appointed date, delay in obtaining environment clearance, prolongation of project due to various reasons, termination payment, loss of toll revenue, delay in commencement of toll operation, loss of productivity of machinery and loss of revenue to the concessionaires envisaged in the financial model before accepting the project.

For example, the concessionaire of Madurai-Tuticorin highway widening project has raised a claim of Rs 8,199 crore, while the project cost was barely Rs 629 crore, citing multiple reasons. Similarly, the concessionaire of four-laning of Mulbagal-Andhra Pradesh/Karnataka border has raised Rs 2,133 crore claim against the original cost of Rs 154 crore. Only in the Gurgaon-Jaipur project, the NHAI has raised a bigger counter claim of Rs 14,952 crore against the contractor, while the private player has made claims of Rs 4,287 crore.

To deal with the disputes and fast-track the alternate resolution of such cases, the government has created two special arbitration mechanisms, which have made some success. Sources said in recent months, NHAI has been able to fast-track the one-time settlement of claims by the Conciliation Committees of Independent Experts. Officials said there have been several cases where private players have raised claims and were going for litigations as well.

Taking note of this, the Parliamentary panel has asked the highways ministry to apprise it of the steps being taken “to penalise road contractors, who habitually take projects to litigation without solid basis”, causing undue delays in completion of road projects.