With the Delhi Airport Metro Express Private Limited (DAMEPL), a special purpose vehicle of Reliance Infrastructure (RInfra), terminating the concession agreement with the Delhi Metro Railway Corporation (DMRC) for the Delhi airport metro line, the Planning Commission has told the Ministry of Urban Development that this “may have serious repercussions on the PPP (public private partnership) approach as a whole” with serious implication for the Twelfth Five Year Plan.
In a letter to the Ministry, the Commission sought information related to the due diligence process followed by the Ministry while signing the deal with RInfra. The reason, the Commission cited while posing 12 questions on the process, was to “identify the lessons learnt and take corrective action before similar mistakes”.
The Commission’s letter dated July 16 was issued with the approval of Deputy Chairman Montek Singh Ahluwalia.
“This is the first major PPP concession that has been terminated after the commencement of operation, and may have serious repercussions on the PPP approach as a whole, especially when DMRC is required to make termination payments that could range between Rs 2,000 crore and Rs 3,000 crore. Therefore, it is necessary to identify the possible fallout and take remedial action as may be necessary, especially since the Twelfth Plan is significantly dependent on private investment for funding infrastructure,” stated the letter addressed to Secretary, Urban Development Ministry.
The DAMEPL had claimed termination payment equal to 130% of adjusted equity and 100% of debt due for the project.
The Commission asked the Ministry to explain who will make the termination payment in the range of Rs 2,000 to Rs 3,000 crore to Reliance and what would be the financial model of the Airport Express Link.