NHAI may take legal action against GMR for scrapping contract

National Highways Authority of India (NHAI) may take legal action against GMR Group, which today announced it is walking out of Kishangarh- Udaipur-Ahmedabad project 16 months after securing the order.

The project is estimated to have required an investment of Rs 5,387 crore. The Bangalore-based group had won the project in Western India through international competitive bidding at Rs 636 crore annual premium for 26 years.

"We are examining the case and based on the experts advise may resort to legal recourse," a senior NHAI official told PTI today.

Meanwhile, GMR Infrastructure today said it has terminated its contract with NHAI for building the Kishangarh-Udaipur-Ahmedabad highway.

"GMR Kishangarh Udaipur Ahmedabad Expressways Limited, a subsidiary of the company, has terminated the concession agreement entered into with NHAI for six laning of 555 Km Kishangarh-Udaipur-Ahmedabad highway," the company said in a filing to the Bombay Stock Exchange.

Company sources said GMR terminated the contract on account of difficulties in taking up the project due to regulatory hurdles, including delays in environment clearance and land acquisition.

The company had won the project in September, 2011, through the international competitive bidding route. It is to be implemented through the Public Private Partnership (PPP) model on Design, Build, Finance, Operate and Transfer basis.

The infrastructure major currently has 4 annuity projects and 6 toll projects totaling 6,685 lane kms cross under its Highways business segment. Financial closure for the project was achieved in May 2012.

Shares of the company closed at Rs 20.55 apiece, up 3.27 per cent on the BSE.