Tuesday, January 26

NHAI owes only Rs 425 crore to IL&FS: Officials


NEW DELHI: National Highways Authority of India owes only Rs 425 crore to the embattled Infrastructure Leasing & Financial Services and the Mumbai-based infrastructure lender and developer has raised claims for about Rs 4,000 crore, which are currently under arbitration, a senior government official has said.

IL&FS and its subsidiaries have defaulted on a number of loan repayment obligations in recent times.

The firm had recently claimed that several government owned concession-granting authorities owe it Rs 16,000 crore which, if cleared, would help solve its liquidity problems.

A senior government official said NHAI, the highway construction arm of the government, has agreed to pay Rs 425 crore to IL&FS as there were cost overruns in the Moradabad-Bareilly Expressway project.

“That’s the only settled amount that the authority owes to IL&FS,” he said on condition of anonymity.

The company has also claimed about Rs 4,000 crore for issues related to four national highway (NH) projects it is implementing, the official said.

“The claims are currently under arbitration and are highly overvalued,” he said. “At no point can a company say that claims under arbitration are 100% receivable.”

A leading infrastructure consultant told ET it has been seen over the years that companies get an average of 25-30% of their overall claim in the arbitration. This would mean IL&FS is likely to recover not more than Rs 1,200 crore in the arbitration.

IL&FS had recently defaulted on a short-term loan of Rs 1,000 crore from Sidbi, while a subsidiary of it defaulted on Rs 500 crore dues to the same development financial institution.

According to media reports, in a letter to its employees, IL&FS had claimed that if funds worth Rs 16,000 crore stuck in claims and termination payments with concession authorities were released on time, it would not have landed in this mess.

At a consolidated level, IL&FS is estimated to have long-term debt of over Rs 65,000 crore and current liabilities of over Rs 39,000 crore.

The official quoted earlier said the Centre has entrusted IL&FS Transportation Network with building of the Zojila tunnel project — at 14.2 km, the country’s longest road tunnel — on the Srinagar-Kargil-Leh National Highway at an estimated cost of Rs 6,808 crore, including the land cost. Zojila pass is situated at an altitude of 11,578 feet.

The tunnel will provide all weather connectivity between Srinagar, Kargil and Leh.

The official said any payment for the project will be made to the contractor only after the company meets the first construction milestone.

“The civil construction work on the project hasn’t started yet,” he said.

On IL&FS’s capability to execute the project, the official said since it is an engineering, procurement and construction project (EPC) being funded by the government, IL&FS should not have a problem. “We are analysing the situation. We can only act if the company starts missing project milestones,” he said.


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