CAG slams toll waiver on Mumbai-Pune expressway during Covid-19 lockdown
It stated that the waiver granted to IRB MP Expressway Private Limited, entrusted with collecting toll on the Mumbai-Pune highway, during the lockdown period in 2020, violated the agreement with Mumbai Pune Expressway Limited (MPEL), which is owned and controlled by the Maharashtra State Road Development Corporation (MSRDC).
As per the sub-concession agreement on February 28, 2020, the IRB was allowed to collect toll for 10 years from March 1, 2020, to April 30, 2030, for a fee of Rs 8,262 crore.
The MSRDC granted a waiver to IRB MP Expressway after it pointed out that the toll collection was disrupted during the lockdown, which constituted a 'force majeure' (unforeseen) event.
'The upfront amount payable by IRB to the MPEL was Rs 6,500 crore (due on 01 March 2020 with interest 9.5 per cent per annum, if delayed) while the balance Rs 1,762 crore was payable in the next three years,' it said.
The audit report pointed out that Article 25.1 of the agreement prescribed that IRB shall effect and maintain suitable insurance cover at its own cost to cover third party claims and 'force majeure' events that include acts of God, epidemic, earthquake, flood, landslide, cyclone, strikes or boycotts, any court orders, geological conditions, and similar circumstances of nature. 'Force majeure' refers to the clause that frees both parties of liabilities in case of such catastrophic events.
The agreement provides that the parties shall bear their respective force majeure costs in case of any loss arising due to the occurrence of such non-political events, and neither party shall be required to pay to the other party any cost thereof.
The report stated that the IRB, however, did not insure its business for force majeure events.
'IRB requested (24 March 2020) MPEL to bear the losses of toll revenue and grant a waiver in the sub-concession fee. MPEL rejected (09 April 2020) the claims, citing the relevant clauses pertaining to non-political force majeure events. Thereafter, upon continued requests from IRB to consider their case for suitable compensation, the Board of Directors of MPEL, in its meeting on April 20, 2020, agreed to provide compensation based on the computation of revenue loss for 25 days in toll collection. The amount of compensation was worked out to Rs 71.07 crore, as prescribed by the Board,' the report said.
'Thus, payment of force majeure cost of Rs 71.07 crore by MPEL to IRB was in contravention to the provisions of the Agreement and undue favour to IRB to the said extent,' it said.
Following the dispute, a mediation report dated October 13, 2023, advised IRB to remit the amount of Rs 71.06 crore to MPEL. The government stated in December 2023 that the recovery of Rs 71.07 crore has been initiated and that MSRDC has been directed to recover Rs 71.06 crore from the contractor within three months, the audit stated.
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