GMR Infrastructure walks out of Rajasthan-Gujarat road project
Premium(Rajkumar)
Firm not to widen the road as govt fails to provide land, environment clearances for the project
Premium(Rajkumar)
Bangalore: GMR Infrastructure Ltd on Monday said it will not widen a 555km highway stretch between Kishangarh in Rajasthan to Ahmedabad in Gujarat because the Union government failed to provide land and environment clearances for the project.
A GMR spokesperson confirmed the termination, which was also communicated to BSE.
The spokesperson said the company was forced to end the project after it found the response of the National Highways Authority of India (NHAI) to an “intent to terminate notice" it sent in mid-December “unsatisfactory".
GVK, another roads developer, also gave notice to the highways agency in the last week of December to terminate a highway project.
GVK declined to divulge details.
GMR walked out of the project because the company realized that the project was not viable as it had offered too high a revenue share to the government to win the contract, two NHAI officials said, requesting anonymity.
Most highway projects are decided on the basis of a bidder willing to share the most from his annual revenue with the government.
GMR had offered to pay NHAI ₹ 636 crore every year for 26 years, in a public auction in 2011.
The next highest bidder was GVK Power and Infrastructure Ltd, which offered ₹ 516 crore a year. The project involved converting a four-lane highway to six lanes at a cost of ₹ 5,387 crore.
GMR secured funding for the project last year from a group of 22 banks. Companies winning highway projects will have to tie up funds within six months of signing a concession agreement that sets out the terms of the contract and puts the project in motion.
Amrit Pandurangi, a senior director with Deloitte Touche Tohmatsu Pvt. Ltd, said the government was only “partly right" when it says that companies may be using the lack of environmental clearances as excuses. Saying banks had become extremely strict about who they lend to, companies were concerned that when loans were restructured by banks because the project was delayed it would reflect badly on the company developing the project.
P. Manoj contributed to this story.
