Tremors of IL&FS’ debt crisis can still be felt in the financial markets with the conglomerate’s transportation arm, IL&FS Transportation Networks, reporting to the exchanges, a missed interest payment, as recently as 2 November.
The rot however doesn’t stem there. As the infrastructure lending giant ran into deadlock a couple of months earlier, reports suggest four of their ongoing projects are now in limbo.
ZOJILA TUNNEL – WHY IT MATTERS?
At 14.2 km, the Zojila Tunnel is slated to be the country’s longest road tunnel. The project is designed to be situated on the Srinagar-Kargil-Leh national highway at an altitude of 11,578 feet. The location of the tunnel lends it socio-economic and strategic importance.
IL&FS bagged the tender of the project in May this year after Prime Minister Narendra Modi laid the foundation stone. A report by The Economic Times states that the project which has a deadline of 7 years and an expected cost of Rs 6,800 crore hasn’t yet seen any physical progress yet.
WHAT’S THE STATUS ON ZOJILA NOW?
The Economic Times report says that the government is now mulling a retender for the tunnel. The project has already witnessed a scrapped tender, one that was bagged by IRB Infrastructure in 2016.
If the project hits yet another roadblock, it will have to go through the entire process of fresh bidding, thereby delaying the deadline considerably.
ZOJILA ISN’T THE ONLY STALLED PROJECT
The Zojila tunnel might be the most significant of IL&FS’ pending projects, but there are more projects caught in the cracks. The official website of IL&FS Transportation Networks lists two of them: Kiratpur Ner Chowk Expressway and Barwa-Adda-Panagarh Section of NH-2 as ‘Under Construction’. The website lists two more: Beawar-Gomti Section of NH-8 and Jharkhand accelerated road development programme as ‘Under Development’.
A Business Standard report suggests that the Patna-Gaya-Dobhi (Bihar) and Amravati-Chikli (Maharashtra) highway contracts are also stalled.
IS IL&FS EXPECTED TO ACT ANY SOON?
Caught in a major financial crisis, IL&FS is unlikely to revive the stalled projects any time soon.
“They have 17 NHAI projects and four of them are under different stages of construction. They don’t seem to be interested in completing these projects and want to settle them. There is a proposal from their side how we can pay them for the work they have done so far on the ground,” The Times of India reported, quoting a National Highway Authority of India (NHAI) official as saying.
WHAT’S THE WAY FORWARD THEN?
The Business Standard report states that the government might go for one-time fund infusion into the stalled projects. However, The Times of India report says none of the under construction projects qualify under “one-time fund infusion” from NHAI since the progress is less than 50 percent.
Caught in a deadlock, IL&FS is deliberating upon the prospects of selling off a dozen national highway projects that are completed and are generating toll revenue. For the record, the transportation arm of IL&FS has 27 completed road projects, including national highways, city and state contracts.
(With inputs from The Times of India, The Economic Times and Business Standard)
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