Debt laden IL&FS likely to sell off a dozen toll generating NH projects

NEW DELHI: The Infrastructure Leasing & Financial Services (IL&FS) is likely to sell off a dozen national highway projects that are completed and are generating toll revenue. These projects involved investment of at least Rs 14,000 crore, sources in the National Highways Authority of India (NHAI) said.

Top brass of the newly constituted board of debt laden IL&FS met NHAI officials on Tuesday where all issues relating to the completed and stuck projects were discussed. Sources said IL&FS representatives said they would soon appoint a professional for valuation of the completed stretches to assess how much they can get from selling these revenue generating projects.

Under the contract conditions, a concessionaire is allowed to sell off the completed projects to another entity after taking the lenders on board. NHAI does not object to such arrangements.

“They have 17 NHAI projects and four of them are under different stages of construction. They don’t seem to be interested in completing these projects and want to settle them. There is a proposal from their side how we can pay them for the work they have done so far on the ground,” said an official. He added that none of the under construction projects qualify under “one-time fund infusion” from NHAI since the progress is less than 50%.

As per the contract norms, if the NHAI terminates the contract for poor performance of IL&FS, the company and its lenders would lose all their investment in incomplete projects. Government officials said one of the options being explored is whether an independent assessment can be done to evaluate the physical progress to decide a payout. TOI had first reported this on October 11. It’s also learnt that the IL&FS representatives also discussed how the pending arbitration cases and claims could be expedited, which involve about Rs 2,300 crore.

In the case of two other strategic projects - tunnels at Zojila and Z-Morh in Jammu and Kashmir - the highways ministry has started preparing alternate plants. In the case of Zojila, the project is set to be cancelled for fresh bidding since there is no physical progress till now.

So far as the Z-Morh project is concerned, IL&FS has subcontracted the work to another construction company and the progress is about 40%. “We are weighing whether we can give the task of completing the remaining work to the same subcontractor who is already involved. A contract document is being prepared so that work can resume as soon as IL&FS walks out of the project,” said a highways ministry official.