NEW DELHI: The Airport Express Link that the Delhi Metro Rail Corporation (DMRC) was forced to take over in 2013 from a unit of Reliance Infrastructure may end up burning a massive hole in its books and raise questions on its ability to add new lines.
DMRC, co-owned by the Centre and the Delhi government, suffered a loss of Rs 708.45 crore in 2015-16. Its revenue stood at Rs 4,344.25 crore during the period.
Last week, Delhi Airport Metro Express Pvt Ltd, a subsidiary of Reliance Infrastructure, had received an arbitration award of Rs 2,950 crore for termination of concession agreements for the metro express project. The total compensation, including the interest, would mount up to Rs 4,670 crore. This could pose a stumbling block for DMRC to add more routes at a time phase-III is yet to be fully operational and planning for phase-IV is on.
With this amount, Reliance Infrastructure is looking to pay off a substantial portion of its debt. On a consolidated basis, the Anil Ambani-promoted firm had a debt of Rs 14,444.28 crore at the end of March 2016.
DMRC is considering moving the Delhi High Court to contest the arbitration award. According to a DMRC spokesperson, “In connection with the arbitration award issued on May 11, 2017, DMRC has decided to seek legal remedies under the Arbitration Act, 1996, and decided to file an objection petition before High Court of Delhi under section 34 of the Act.”
DMRC is of the opinion that the termination notice issued by Delhi Airport Metro Express when it wanted to exit the Metro line was legally untenable and was against the provisions of the agreement signed between DMRC and Reliance Infrastructure.
DMRC said Delhi Airport Metro Express had abandoned the airport line on June 30, 2013. DMRC took over the project in public interest. Today, it is carrying about four times the traffic on this line by adopting various consumer-friendly measures, including fare cuts. “Now, the ridership is about 40,000, the same as predicted when the contract was given out to Reliance,” said a DMRC official.
- The 22.7-km line built at Rs 5,800 crore links New Delhi Railway Station to Terminal 3 of Delhi airport
- DMRC built the civil infrastructure and spent over half of the Rs 5,700-crore project cost
- Delhi Airport Metro Express (DAMEPL) brought in rolling stock and was supposed to run the line for 30 years
- R-Infra’s DAMEPL on May 17, 2012, informed DMRC about defects in civil structures
- In July 2012, line is completely shut down after DAMEPL slowed down the service citing safety
- On June 27, 2013, DAMEPL informs it will stop operating the line from the night of June 30
- In October 2012, arbitration proceedings begin between DAMEPL and DMRC
- DMRC takes charge of the line in July 2013; It is asked to pay off debt under contract
- On May 11, 2017, DAMEPL wins Rs 2,950 crore arbitration claim on DMRC
- DAMEPL files a petition in the Delhi high court seeking early payment of Rs 3,500 crore of the total arbitration award
Reliance Infrastructure, however, claims the award has been granted on the basis of termination provisions of the concession agreement where the arbitration tribunal has held termination by Delhi Airport Metro Express as valid.
“The compensation covers damage as a result of breach by DMRC of its obligations under the concession agreement and material adverse effect on the ability of Delhi Airport Metro Express to perform its obligations under the agreement,” Reliance Infrastructure said.
Reliance Infrastructure claimed the guidelines approved by Cabinet Committee on Economic Affairs and issued by Niti Aayog on September 5, 2016, public sector units are expected to pay 75 per cent of the award amount against bank guarantee even if they propose to challenge the arbitral award. Therefore, Reliance Infrastructure expects to get Rs 2,210 crore even if DMRC proposes to challenge the award.