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Delhi Metro Rail Corporation will discuss the payout of an aribitration award to Reliance Infrastructure at its next board meeting later this week. The Supreme Court had recently upheld the arbitration award in favour of the Anil Ambani-backed infrastructure company in a case related to the Airport Metro Express Line project.
According to sources DMRC will have to either dip into its cash reserves to make the payment or seek fresh loans from banks.
“DMRC has bank deposits of over ₹10,000 crore at the end of March 2020, so the payment to Reliance Infra should not be a problem for them. If it opts to seek a loan, that should also not be an issue because DMRC is an AA+ rated company, by CRISIL,” said a source.
‘Government assistance’
Delhi Metro is a 50:50 joint venture between the Union Ministry of Urban Development and the Delhi Government. So it can also seek the government’s help also in securing the required funds.
In 2008, an agreement was entered into between DMRC and Reliance Infra’s special purpose entity Delhi Airport Metro Express Pvt Ltd for design, installation, commissioning, operation and maintenance of Airport Metro Express Line.
Also read: RInfra to use proceeds from DMRC award to settle debt
In 2012, DAMEPL complained of faulty design and quality in the installation of viaduct bearings and issued notice asking DMRC to cure the defects within 90 days, failing which it shall be treated as a breach of the agreement. Following the lapse of the deadline, it issued a termination notice. DMRC filed for arbitration claiming that the termination notice was illegal and asked for compensation of ₹3,173 crore with an interest of 18 per cent per annum.
DAMEPL filed a counterclaim seeking ₹3,470 crore as termination payment along with interest. The Tribunal upheld DAMEPL’s claims and awarded ₹2,782.33 crore, along with further interest, as termination payment.
‘Repay debt’
Reliance Infrastructure chairman Anil Ambani said recently during the annual general meeting, the company is expecting to receive ₹7,100 cr from DMRC which it will use to repay debt and make the company debt-free.
DMRC did not respond to a query sent by BusinessLine .
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