Banks that helped build the most expensive and first public-private partnership Metro line in the country say it is a non-performing asset
A consortium of banks led by Axis Bank and India Infrastructure Finance Company (IIFC) has slapped legal notices on Delhi Airport Metro Express Line (DAMEL), a private-public partnership between Delhi Metro Rail Corporation (DMRC) and Reliance-Infra, for non-payment of bank loans. The project has turned into a non-performing asset. This comes as a double blow for DAMEL, which is already engaged in a legal dispute between DMRC and Reliance-Infra.
DAMEL carries a little over 10,000 commuters between Shivaji Stadium and Dwarka, and halts at the Indira Gandhi International Airport to help commuters avoid traffic. But DAMEL now has nobody to take responsibility for its liabilities.
According to DMRC, which is now operating the airport Metro line, the 54:46 partnership between Reliance-Infra and DMRC failed to pay interest for the loans from the consortium of banks since March 2013. Delhi Airport Metro Express Private Limited (DAMEPL) borrowed Rs 1,800 crore from Axis Bank-led consortium and Rs 350 crore from UK-based IIFC after the company bagged the contract in 2009. DMRC spokesperson issued a statement that liability to pay interest for the loan rests with DAMEPL even though Reliance Infra has invoked the termination clause to the agreement.
On the other hand, Reliance-Infra issued a statement that its concessionaire DAMEPL “has terminated the Concession Agreement through termination notice dated October 8, 2012, owing to DMRC’s Event of Default.” It further stated that DMRC has already taken over the entire project with effect from July 1, this year with all existing contracts, employees from DAMEPL. Since July 1, DMRC has been collecting all the revenues while the arbitration proceedings are going on under Railway Board.
Earlier this year, the Comptroller Auditor General of India had pointed out that Reliance-Infra has diluted its stake in the concessionaire, a charge strongly refuted by Reliance Infra (see ‘Profitable Exit’). Since 2012, DAMEL operations came to standstill until January 2013 when Reliance-Infra pointed out some serious structural defects in the Metro line owing to which DAMEL trains had to slow down. While DMRC claims the faults were repaired, Reliance-Infra wanted to back out of the project citing losses.
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