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Airport Metro: Reliance Infra Claims Termination Payment

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Indian firm Reliance Infra blamed DMRC's "persistent" failure to cure defects in the civil structure for termination of the concession agreement to run the Delhi Airport Metro Line and claimed termination payment from it.

The body, which owned Delhi Airport Metro Express Private Limited (DAMEPL), had written a letter to Delhi Metro Rail Corporation (DMRC) on 27 June expressing its inability to continue operations of the line.

DMRC has, however, rejected the notice given by Reliance Infra, terming the move as a "violation" of the concession agreement and the ongoing arbitration proceedings. It though has decided to take over the operations of the 22.7 km-long link from Monday.

In a statement, Reliance Infra said DMRC is now liable to pay DAMEPL a termination payment equal to 130 per cent of the adjusted equity and 100 per cent of the debt due for the project. Sources said this could translate to Rs 2,800 crore though Reliance Infra did not specify the amount. It argued that the termination has arisen owing to DMRCs event of default.

It further said that despite the lapse of nine months and repeated requests by DAMEPL, DMRC failed to make alternate arrangements for taking over the operations of the metro line, even after the termination of the concession agreement in October 2012.

"The termination clause had to be invoked by DAMEPL, as DMRC had persistently failed to cure substantial defects in the civil structure designed and built by DMRC, within the period prescribed under the concession agreement, and on account of material breach and event of default by DMRC arising under the agreement", it said.

It contended that DAMEPL's claims for the termination payment are fully justified and enforceable, and Reliance Infra is confident of recovering its entire investment in DAMEPL.

The Airport Metro line, which is the country's first Public Private Partnership (PPP), has had a tumultuous run beset with controversies after it began operations in February 2011.

The services were suspended from July 7, 2012 to January 22, 2013 due to technical problems and after reopening, the speed was cut to 50 km per hour, extending journey time from the airport to New Delhi Railway Station to over 40 minutes, which resulted in a fall in ridership.

Before the suspension of services, the ridership hovered around 20,000 to 21,000 per day but after the resumption, the ridership was nearly halved to around 10,000.


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news 4 infrastructure dmrc reliance infra airport metro damepl