With the deadlock over the Airport Express metro project in the capital threatening to become a problem of bad debt for the lenders, a consortium of lenders is considering action against the concessionaire — Delhi Airport Metro Express Pvt. Ltd (DAMEPL), a subsidiary of Reliance Infrastructure Ltd — for recovery of the dues.
The consortium has a total exposure of Rs.1,800 crore to the Airport Express metro project.
"We have reviewed the account. It is heading towards a critical account. For the last two months, there are overdues in the account," said Harsh Kumar Bhanwala, the officiating chairman and managing director of India Infrastructure Finance Co. Ltd (IIFCL), whose UK subsidiary is a lender to the project.
"Technically, the concessionaire is still Reliance. They have themselves given a unilateral notice of termination. Legally, they have not been absolved by DMRC (Delhi Metro Rail Corp.). There is no change in the concessionaire as of now," he said.
Anuj Dayal, DMRC spokesperson, agreed that the termination notice issued by Reliance Infrastructure, part of Anil Ambani's Reliance Group, was unilateral. "The termination notice is under arbitration and we are running the line only in public interest," he said over the phone.
A DAMEPL spokesperson said DMRC had taken over the entire project with effect from 1 July, including all existing contracts and employees from DAMEPL.
"Accordingly, there is no liability on DAMEPL to make any further repayment to the lenders. Instead, as per the terms of the agreement, and as legally advised, all liabilities to lenders are now to be repaid by DMRC," the spokesperson said in an email.
An Axis Bank spokesperson refused to comment because they are in a silent period before announcement of results.
Bhanwala said IIFC UK will write to the lead lender, Axis Bank, to consider initiating action for recovery of the dues. "All lenders are affected by it and everyone is trying to ensure that NPAs (non-performing assets or bad loans) do not rise. Banks are contemplating action for recovery," he said.
IIFC UK has exposure of around $54 million (around Rs.350 crore) on account of an overseas loan for the import of rolling stock for the project.
While for banks that lent to the project, the account will become an NPA if the dues are not paid for three months, in the case of IIFC this will happen after 6 months. Once an account is declared an NPA lenders have to set aside money to cover the risk of default.
The 22.7-km Delhi airport metro line was a joint venture between DAMEPL and DMRC. DMRC built the civil infrastructure and spent more than half of the Rs.5,700-crore project cost, and DAMEPL brought in the rolling stock and was supposed to run it for 30 years. But Reliance Infrastructure pulled out of the agreement with DMRC in July saying the project was not financially viable.
The decision on the termination notice and who will repay the debt is being considered by an empowered group of ministers on mass rapid transit system headed by defence minister A.K. Antony.
Copyright 2013 - Mint, New Delhi