GMR Settles Dispute with NHAI, to Receive ₹1,378 Crore for NH-65 Project
News Mania Desk/ Agnibeena Ghosh/30th June 2024
GMR Power and Urban Infra announced on Friday, June 28, that its subsidiary, GMR Hyderabad Vijayawada Expressways Pvt Ltd (GHVEPL), has reached an amicable settlement with the National Highways Authority of India (NHAI) regarding the 181.5 km stretch between Hyderabad and Vijayawada on NH-65.
According to the agreement, NHAI will compensate GHVEPL ₹1,378.21 crore in two tranches to settle all disputes related to the project. The first tranche of ₹850 crore has already been received by GHVEPL, which will primarily be used to repay loans to its consortium of lenders, as per a filing with the stock exchange by GMR Power and Urban Infra.
The remaining ₹537.21 crore will be disbursed to GHVEPL on July 1, 2024, the handover date of the project. This amount will be utilized for further reducing corporate debt within GMR Power and facilitating investment growth in its other business ventures.
GHVEPL had initially entered into a concession agreement in October 2009 to construct, operate, and maintain the two-lane stretch on NH-65. However, the project encountered significant revenue loss due to the bifurcation of the stretch between Telangana and Andhra Pradesh post the project’s commissioning. This prompted GHVEPL to file claims against NHAI under the agreement, seeking compensation for losses arising from legislative changes.
The settlement marks a resolution to a long-standing dispute between GHVEPL and NHAI, ensuring financial closure for the project and enabling NHAI to regain control over the highway segment from GHVEPL effective July 1, 2024.
Shares of GMR Power and Urban Infra closed 5% lower at ₹84 apiece on Thursday, June 27, reflecting market reaction to the settlement announcement. However, the stock has shown significant growth over the past year, gaining 366.72%, underscoring investor confidence in the company’s strategic initiatives and future prospects.
The resolution of this dispute underscores the importance of clear contractual frameworks in infrastructure projects and highlights NHAI’s commitment to resolving disputes through dialogue and mutual agreement, ensuring smoother execution of national infrastructure initiatives.
