Debt-ridden IL&FS also saw some relief in the form of arbitration awards. “We were paid Rs 550 crore in arbitration awards. Another Rs 550 crore we won in arbitration award is yet to be paid. Besides, claims to the tune of Rs 800 crore are still pending,” an official from the group said, requesting anonymity.
The Union government had asked its departments to speed up payments to IL&FS after the group landed in financial trouble last year.
In September 2018, a Rs 425-crore claim was cleared by a conciliation committee meeting of independent experts appointed by the NHAI in IL&FS’s Moradabad Bareilly Expressway project. Pune Sholapur Road Development Company and Jorabat-Shillong Expressway are two other projects where IL&FS and the NHAI are involved in arbitration. In the June 2019 quarter, IL&FS also filed a writ petition against the authority for a road project in Rajasthan.
Not all road developers have seen fast redressal. Bank guarantees remain a concern. “Some banks are asking for 100 per cent margins before issuing a BG (bank guarantee),” said an official. In 2016, the government passed a new policy to allow 75 per cent disbursal of the award money for arbitration, even if it is legally contested further. The disbursal requires the company to give a bank guarantee to the NHAI.
IRB Infrastructure was one of the early beneficiaries of this new policy in 2016. According to an Indian Ratings research note, Rs 980 crore worth of funds were released in the first six months of the policy’s introduction. “We have not won any arbitration award in recent times,” said an official with IRB Infrastructure.
MEP Infrastructure is another company which has initiated claims worth Rs 200 crore against the NHAI in the current financial year for its MEP Chennai Bypass project. “Issues like green clearances, delay in toll notifications, land acquisition are some of the reasons leading to arbitration,” said Jayant Mhaiskar, chairman and managing director, MEP Infrastructure Developers.
In addition to the unavailability of bank guarantees, industry officials say, the timeline for arbitration and its resolution is longer, which in most cases is a year on more.
As most of the times resolution takes long, companies are going for monetisation of these claims. In March, HCC entered into one of India’s early litigation funding deals with BlackRock for Rs 1,750 crore. Litigation funding involves monetising claim rights to a third party for a claim before the award has happened.
In July, Anil Ambani, chairman for Reliance Group, pegged claims pending with various authorities at Rs 30,000 crore, of which Rs 8,000 crore was either awarded or was at an advanced stage.