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Over 300 arbitration cases with claims of around Rs. 80,000 crore pending with Highways Ministry: Nitin Gadkari

Main reasons of invocation of arbitration are compensation for delay in handing over of land, damages due to Change in Scope, loss incurred on account of extended stay in the project, delay in distribution of grant/annuity payment, change in law, additional interest paid to lenders, interest on delayed payments, non-achievement of project milestones etc, he said.

, ET Bureau|
Updated: Dec 12, 2019, 06.24 PM IST
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The Minister said award has been published in 694 arbitration cases, out of which 293 have been settled so far.
New Delhi: The highways ministry has more than 300 ongoing arbitration cases with a claim amount of around Rs 80,000 crore, Union minister of road transport and highways Nitin Gadkari informed the Parliament on Thursday.

“318 arbitration cases are ongoing with a claim amount of about Rs. 78, 653 crore,” Gadkari said in a written response in Lok Sabha.

There are few cases where the amount of claim raised by the contractor or concessionaire is more than the total project cost.

The average payout in arbitration cases does not exceed 20-25%, a government official said. Even with that percentage, the highways ministry stares at a liability of Rs 16,000-Rs. 20,000 crore.

“Against the claim of around Rs 80,000 crore, the National Highways Authority of India (NHAI) has made counter-claims of around Rs 35,000 crore,” the official quoted above said.

Compensation for delay in handing over of land, damages due to Change in Scope, loss incurred on account of extended stay in the project, delay in distribution of grant/annuity payment, change in law, have been cited as the main reason for invocation of arbitration.

Gadkari counted additional interest paid to lenders, interest on delayed payments, non-achievement of project milestones among other reasons.

Award has been published in 694 nos. of arbitration cases, out of which 293 have been settled so far, Gadkari said.

NHAI has paid around Rs. 2,000-2,500 crore on account of arbitration in the last couple of years, the official said.

In order to avoid arbitration cases and additional costs, the government has resolved that work will not be awarded where 80% of encumbrance free land is not made available for the project, Gadkari said.

“Alternate dispute resolutions through committee of conciliation by independent experts are constituted to avoid arbitration,” Gadkari added.

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