The NTBCL was promoted by the Infrastructure Leasing and Financial Services Ltd. (IL&FS) as a special purpose vehicle (SPV) to develop construct, operate and maintain the DND Flyway on a Build Own Operate Transfer (BOOT) basis. The Rs 408 crore project was implemented on the basis of a 30-year concession with NOIDA in 1997. The UP Government and the Government of NCT of Delhi had executed a Support Agreement in January 1998, in favour of the project. It was supposed to set the model for infrastructure privatisation in the country.
Apart from equity contribution of Rs 10 crore by the concession grantor (NOIDA), the funding of Rs 408 crores (debt and equity) was raised by IL&FS on a project recourse basis on commercial terms. The toll road started operations in 2001. This was a contract where the Noida Toll Bridge would operate for 30 years or until it recovered its investment. With initial traffic being far below projections, the company suffered losses for several years, restructured its debt and has only been able to pay dividends to its shareholders since 2010-11, 10 years after the operations started.
Given the 20% assured return and inability of the project to generate surplus to meet the target, the total cost of project, which includes returns, to be recovered, has kept increasing in the last 15 years. The original cost was Rs 378 crore, which has now gone up to Rs 5,000 crore in March 2016. Thus, if NOIDA terminates the contract in between, it will have to pay this amount, said sources.
In July last year, on NOIDA’s request, the company submitted an amendment to the Concession Agreement confirming a fixed term concession up to 2031 and capping the total cost of the project and returns to be recovered in case of earlier termination. This proposal is pending approval of NOIDA, and thereafter will need shareholder approval.
The DND Flyway, which connects Delhi and neighbouring Noida, was made toll free for the commuters as the Supreme Court refused to stay the Allahabad High Court verdict restraining NTBCL. The Supreme Court has asked the Comptroller and Auditor General (CAG) to confirm whether the total cost of the project has been recovered or not, based on which the tenure of the Concession is determined.
“The company was collecting toll as per the terms of the 30-year Concession Agreement, which was executed between NOIDA, IL&FS and NTBCL and a Support Agreement executed by the UP and Delhi governments. The Project and the Concession Agreement was approved by the UP Cabinet, Institutional lenders, banks and multilateral agencies who invested in the project as did the public via two public issues,” said sources. The DND Flyway is India’s first greenfield PPP project and has all the requisite clearances. It is functioning under a Concession Agreement. Other than land which has been acquired by the government (for which NTBCL has paid), all funding has been privately raised from banks, financial institutions, multilateral funding agencies, foreign Institutional investors and the public with no recourse to the government. NTBCL is listed on BSE, NSE and the AIM segment of the London Stock Exchange and has around 80,000 shareholders in India and abroad, who have invested in this project on the basis of the Concession Agreement. Meanwhile, the spectre of job loss looms large over 400 employees of the NTBCL. This week, the employees protested against the termination letter issued to them.