NHAI suffers Rs 4-bn loss on non-recovery of damages from realty developers

National Highways Authority of India (NHAI) suffered losses of about Rs 4 billion on various counts including undue favour to developers by not recovering damages for project delays, government auditor CAG has said.

Indicting NHAI for an undue favour to a developer on a stretch, CAG in its latest report said it cost NHAI a loss of nearly Rs 1 billion.

"NHAI extended an undue benefit to the concessionaire to the tune of Rs 992.7 million by not taking prompt action to recover the damages and maintenance cost from the concessionaire on account of its failure in achieving the project milestones and in meeting the maintenance obligations," CAG said in its report tabled in Parliament yesterday.

 

It said NHAI in March 2012 had entered into a concession pact with Vijayawada Gundugolanu Road Project Pvt Ltd for six laning of Vijayawada-Gundugolanu section of NH 5 but served termination notice as work was not commenced till August 2016.

"By that time, an amount of Rs 992.7 million had become recoverable" but "NHAI failed to safeguard its financial interests as it neither encashed the bank guarantees submitted by the concessionaire nor recovered the dues from the Escrow account," the report said, adding that it failed to recover the damages.

Likewise, it said that the Authority failed to recover damages of Rs 851.9 million from four concessionaires on account of delayed/non-completion of work in four road widening projects in Andhra Pradesh.

It further said: "NHAI failed to collect the toll at two toll plazas even after completion of the project relating to strengthening and upgradation of Karur-Coimbatore section of NH-67 which resulted in a revenue loss of Rs 1.42 billion."

It added that the Authority also extended the undue favour to a developer amounting to Rs 256.7 million by not levying penalty for delay attributable to the concessionaire in the construction of Railway Over Bridge (ROB) at Sitamarhi by-pass in a project for two laning of Muzaffarpur- Sonbarsa Section of NH-77 in Bihar.

Many other cases were also cited by the CAG.