GMR's road PPP project in India to be terminated

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GMR's road PPP project in India to be terminated

GMR Infrastructure's contract to develop the six laning of 555 Km Kishangarh - Udaipur -Ahmedabad highway PPP project in India could be terminated soon.

The project was awarded in July 2011 to GMR Infrastructure. According to the original project bid, GMR was supposed to pay a premium to National Highways Authority of India (NHAI) for 26 years, with the premium being Rs6.36 billion($102 million) in first year. In subsequent years, the payout would have increased by 5 per cent.

The project was expected to reduce the time and cost of travel for traffic plying between Kishangarh and Ahmedabad. It would be developed on a design, build, finance, opearation and transfer (DBFOT) basis in BOT (Toll) mode of delivery.

The total project investment was estimated at Rs77 billion (US$ 1.236 billion).

During the last two years the firm and the NHAI have been discussing with the intent to revive the project.

However, top road ministry officials recently said that the "special dispensation" sought by the developer, GMR Infrastructure, to start work on the 555 km highway stretch, has been turned down by both NHAI and the road ministry. "Now there is no scope of contract to continue," a government official said.

According to sources, GMR wanted 75% of the premium to be rescheduled. The firm also wanted that any surplus in toll collection, left after servicing debt and premium obligations, should not be withdrawn by NHAI but used for maintenance of the project.

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