Debt-laden Infrastructure Leasing & Financial Services (IL&FS) Ltd has agreed to return under-construction road projects to the National Highways Authority of India (NHAI) for fresh bidding, according to the minutes of IL&FS’s 22 April board meeting.
In a meeting with NHAI officials, IL&FS did not object to inviting fresh bids for the under-construction projects provided that they arrive on “an amicable settlement of dues". A copy of these board minutes was reviewed by Mint.
Settling and awarding dues to IL&FS is imperative as the financial services and manufacturing group of companies is struggling under a massive debt of ₹99,358 crore as of September 2018.
IL&FS defaulting on debt payments precipitated a liquidity crisis in non-banking financial companies (NBFCs).
According to the minutes of the board meeting, IL&FS and NHAI discussed the future of 10 projects that are incomplete, at various stages of completion or where the financial closure has not been achieved yet.
Out of them, three of the projects have achieved 80% completion and the remaining seven are completed in the range of 10-50%.
These projects, after analysing the information available in annual reports, are worth ₹14,519 crore.
This is expected to bring in much-needed clarity as many of the ongoing NHAI projects with IL&FS were likely to miss deadlines due to lingering ambiguity on the future of these projects.
These projects include the strategically important Z-Morh Tunnel, also known as Srinagar Sonmarg Tunnelway, in Jammu and Kashmir.
This is in addition to 14.2-km Zojila tunnel project, deemed as the country’s longest road tunnel in Kashmir which has already been returned to NHAI for rebidding.
The work done by IL&FS would be valued by the regional offices of NHAI to arrive at an arbitration amount, the minutes said.
A spokesperson for IL&FS in an emailed response said, “All our road projects are on track, as planned, to be resolved as per the resolution framework submitted to the government. With regards to the incomplete projects, we are in discussion with the concerned authorities to resolve them in accordance with the new framework announced by the government in March this year."
IL&FS during the meeting stated that it has made significant additional investments.
“Significant additional investments were made which were not covered under the definition of debt due, hence, the option of work done may be considered instead of lowest of value of work done or 90% of debt due," the minutes of the meeting read.
However, NHAI said this may not be possible and will share a draft on project termination payment with IL&FS.
NHAI will share the estimate of dues with IL&FS by the third week of May. It will decide on the estimates for Khed-Sinnar Expressway—a toll road in Maharashtra; Barwa-Adda Expressway situated in Jharkhand-West Bengal; and Z-Morh Tunnel.
These projects will be taken over by NHAI for completion of balance work and claims of IL&FS would be settled, said the minutes of the meeting.
The conciliation committee has also asked ITNL and NHAI to come to an amicable settlement on Jorabat-Shillong Expressway in Assam and Meghalaya; Chenani-Nashri Tunnelway in Jammu and Kashmir; and Baleshwar-Kharagpur in Odisha and West Bengal.