CAG report flags Rs 71 cr given to Mumbai-Pune Expressway toll firm for Covid disruption

A report of the Comptroller and Auditor General of India has slammed the Maharashtra government for irregular revenue waiver of Rs 71.07 crore given to the Mumbai Pune Expressway toll operator amid the COVID-19 lockdown.The Report of the Comptroller and Auditor General of India on Compliance Audit was tabled in the Maharashtra legislature on Friday.The Mumbai Pune Expressway Limited (MPEL), a government company owned and controlled by Maharashtra State Road Development Corporation (MSRDC), had entered into a sub-concession agreement with IRB MP Expressway Private Limited (IRB) for Tolling, Operation, Maintenance and Transfer (TOT) for the period from March 1, 2020 to April 30, 2030 for a sub-concession fee of Rs 8262 crore.“The upfront amount payable by IRB to MPEL was Rs 6500 crore (due on March 1, 2020 with interest 9.5 per cent per annum, if delayed) while the balance Rs 1762 crore was payable in the next three years. The toll collection commenced from March 1, 2020 and the contract is in progress,” it said.The report said, as per Article 25.1 of the agreement, IRB was supposed to maintain suitable insurance cover at its own cost to cover third party claims and ‘force majeure’ events including non-political events, which Article 27.2 described as act of god, epidemic, earthquake, flood, landslide, cyclone, strikes or boycotts, court orders, geological conditions and similar circumstances of nature.Article 27.7.2 of the agreement also laid down that in case of losses arising due to occurrence of such non-political events, the parties shall bear their respective force majeure cost and neither party shall be required to pay to the other party any cost thereof, the report pointed out.The report claimed IRB did not insure its business for force majeure events.After the COVID-19 lockdown came into force on March 23, 2020, toll collection was disrupted and this constituted a non-political force majeure event in terms of Article 27.2, the report said.“IRB requested (on March 24, 2020) MPEL to bear the losses of toll revenue and grant a waiver in the sub-concession fee. MPEL rejected the claims citing the relevant clauses pertaining to non-political force majeure events,” it said.“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 computation of revenue loss for 25 days in toll collection. The amount of compensation was worked out to Rs 71.07 crore,” 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, the CAG report asserted.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, it added.“Following dispute, a mediation report dated October 13, 2023 advised IRB to remit Rs 71.06 crore to MPEL. The government stated (in December 2023) that recovery of Rs 71.07 crore has been initiated. The government further stated that MSRDC has been asked to recover Rs 71.06 crore from the contractor within three months,” it said.