Key Points

The auditor report was tabled by Deputy Chief Minister Ajit Pawar in the Assembly on Friday.

The audit report said that Mumbai-Pune Expressway Limited (MPEL) is a government company owned and controlled by Maharashtra State Road Development Corporation (MSRDC) and it entered into a sub-concession agreement on February 28, 2020, from March 1, 2020 to April 30, 2030, with the IRB MP Expressway Private Limited (IRB), for "tolling, operation, maintenance and transfer" of Mumbai-Pune highway with effect from March 1, 2020, for a sub-concession fee of Rs 8,262 crore.

"The upfront amount payable by IRB to the MPEL was Rs 6,500 crore (due on March 1, 2020, with interest 9.5 per cent per annum, if delayed) while the balance Rs 1,762 crore was payable in next three years. The toll collection commenced from March 1, 2020, and the contract is in progress," it added.

The audit report said that Article 25.1 of the agreement prescribed that IRB will effect and maintain suitable insurance cover at its own cost to cover third party claims and 'force majeure' events, including non-political events.

As per Article 27.2, non-political event includes act of god, epidemic, earthquake, flood, landslide, cyclone, strikes/boycotts, any court orders, geological conditions and similar circumstances of nature.

"The Article 27.7.2 of the agreement provides that any losses arising due to occurrence of such non-political events, the parties will bear their respective force majeure cost and neither party will be required to pay to the other party any cost thereof," the report added.

CAG in its report also said that the IRB, however, did not insure its business for force majeure events.

After implementation of government lockdown from March 23, 2020, in response to contain Covid-19, the toll collection was disrupted and this constituted a non-political force majeure event in terms of Article 27.2, the report added.

"IRB requested (March 24, 2020) MPEL to bear the losses of toll revenue and grant a waiver in the sub-concession fee. MPEL rejected (April 9, 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 ( April 20, 2020) agreed to provide compensation based on 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, was effected by reduction (June 18, 2020) in first installment of concession fee received," the report said.

"The decision of the MPEL for payment of compensation of Rs 71.07 crore to IRB for a non-political force majeure event was not in compliance with Article 27.2 and 25.1 of the Agreement. As such, IRB should have borne the force majeure cost. Thus, payment of force majeure cost of Rs 71.07 crore by MPEL to IRB was in contravention to provisions of the agreement and undue favour to IRB to the said extent," it added.

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 said (on December 2023) that recovery of Rs 71.07 crore has been initiated. The government further said (August 2024) that MSRDC has been directed to recover Rs 71.06 crore from the contractor within three months," the report said.

- IANS