CAG raps HUDA over Gurgaon Rapid Metro contract

The CAG has rapped the Haryana Urban Development Authority (HUDA) for "failing" to enforce the terms of concession contract which resulted in undue benefit to the concessionaire of the Rapid Metro in Gurgaon at the cost of public.
In its latest audit report, the Comptroller and Auditor General (CAG) said the HUDA had entered into a concession contract assuming 80 per cent of liabilities of concessionaire in the event of termination of the contract and default of the concessionaire as to the costing of the project and extent of potential liabilities.
"HUDA and its successor Haryana Mass Rapid Transport Corporation failed to enforce the terms of concession contract which resulted in non-recovery of interest of Rs 1.57 crore for delayed payment of connectivity charges and charging of excess passenger fares amounting to Rs 11.84 crore by the concessionaire," the report said.

As per the report, a private company had proposed in September 2007 to develop and operate a metro link between Sikandarpur and NH-8 Gurugram to mitigate congestion due to increase in traffic.
HUDA invited expressions of interest in 2008 and 2009 for development of metro link on built-operate-transfer basis for 99 years. In response to it, consortia Rapid Metro Rail Gurgaon Limited (RMGL) proposed an alternative metro route of 5.1 km in length at estimated project cost of Rs 900 crore.
As per the concession contract, RMGL was to pay connectivity charges of Rs 5 crore to HUDA within 60 days of signing of contract which was by February 8, 2010. However, RMGL did not deposit connectivity charges as stipulated in the concession contract.

The audit observed that there was no consistency in the approach of HUDA in implementing the terms of the concession contract. The deviation from the terms of concession contract resulted in non-recovery of interest of Rs 1.57 crore, the report said.

The concession stipulated that passenger fares shall not be more than the Delhi Metro fares for the corresponding zone slab.
RMGL commenced passenger service in 2013 and fixed an initial fare of Rs 12 per trip which it revised to Rs 20 per trip from 2014 though no fare had been hiked by DMRC.
In October 2015, HUDA/HMRTC informed RMGL that it could not fix rate higher than DMRC and asked RMGL to deposit the amount of excess fare charge by August 2014.

"The Corporation had not taken any further action to
enforce the terms of concession contract which resulted in undue benefit to the concessionaire at the cost of public. The excess fare collected by RMGL worked out to be Rs 11.84 crore as on March 2016," the CAG report said.
Meanwhile, in another case, the CAG said the leasing out of land for amusement park in Gurgaon without assessing the unearned increase in value of land as per regulations by HUDA led to non-deposit of Rs 417.15 crore.
The report said the land acquisition officer of Gurgaon had recommended a bid premium of Rs 106 crore for 58 acres in July 2009 for leasing out the land for 33 years.

It said that HUDA did not apply a provision which stipulated deposit of 50 per cent of unearned increase in value of land with it.
The market value of the land worked out at Rs 928.8 crore and the 50 per cent of unearned increase was Rs 417.15 crore which was neither demanded nor deposited by the firm.