In an effort to hide the financial crisis DMRC is facing, The Delhi Metro Rail Corporation wrote a letter to the central government. The Delhi Metro Rail Corporation (DMRC) wrote a letter to the central government and the Delhi government asking them to infuse funds into the public sector. Infusion of funds is usually done when one of the divisions is not doing very great when compared to the other sectors, and it may get benefit from an infusion of funds from the more successful division. When talking about the DMRC DMRC, this happens to be from the public sector.
The court has given time to DMRC till the 31st of October in order to formulate a repayment plan. The DMRC owes a sum of 7010.08 crores to Reliance Infrastructure owned Delhi Airport Metro Express Private Limited (DAMEPL), and a sum of 2599.17 crores has already been paid. DMRC called for a sum of 3500 crores both from the state and central governments. This is because the Delhi Metro is a Joint Venture. The Delhi Metro Corporation is seeking the sum of 3500 crores in the form of an Interest Free subordinate debt or a grant. The DMRC is planning to repay Reliance Infrastructure with this sum that the centre and state governments will provide.
On 6th of October, DAMPEL submitted that the DMRC was supposed to pay the granted amount in the form of an award. This was supposed to be submitted within a time period of 4 weeks. In the September 6 order justice, Rao said that if the DMRC fails to pay the granted amount in four weeks, it will force the court to call the Managing Director of DMRC in the hearing.
Although the high court granted some breathing space by allowing more time to the Rail Corporation, the DAMPEL counsel raised their concern about the fundraising plans of the DMRC. The high court did not get into how DMRC is planning to raise the remaining funds to pay the balance amount to DAMPEL.
DAMPEL has debts that they need to pay to the leaders of the project, and the DMRC should be responsible enough to come up with some plan for making the outstanding payments. Nonetheless, The HC has granted till 31st of October for DMRC to come up with a repayment plan.
The DMRC stated in the hearing respectfully submitted that if any of the prayers that is prayed for by the decree-holder are granted by this court, at this juncture, will result in the operations of the DMRC coming to a complete standstill, which would be harmful to the public interest specially when one considers that approximately 48 lakh journey’s take place on a daily basis on the metro system maintained by DMRC in the NCR.
Delhi Metro Rail Corporation Debt Trap!
Indiana Attorney General R. Venkataraman, while appearing for DMRC, stated that the Delhi Metro would fall into a ‘debt trap’ if it were to raise loans to pay the arbitration award to Anil Ambani owned DAMEPL.
Further, he also added that the activities and operations of the Delhi Metro will have serious consequences for its current operations if any adverse decision is made with regard to the gravity of the situation. He also put light on the fact that millions of commuters will simply be told to not to use the Delhi metro if any adverse order is passed against the Delhi metro at this point in time.
Further, the affidavit stated the DMRC has already repaid or tendered an amount of 2600 crores to Anil Ambani-owned DAMPEL. It also stated that the DMRC is expecting an infusion of funds from the shareholders in order to repay the remaining amount of the arbitral award.
As per DAMPEL, the incompetency of DMRC has caused immense loss to its promoters, i.e., Reliance Infrastructure Ltd. It has already infused a sum of 2513 crore to DAMPEL. They achieved this by taking loans from public sector banks. The banks have now initiated proceedings against the company. It also argued that any further delay in the repayment of the arbitral reward would result in ‘irreversible consequences’ both for DAMPEL and Reliance Infrastructure Ltd.
This arbitration award is based on the 2008 agreement between DMRC and DAMPEL in order to develop and operate the orange line of the Delhi Metro. This orange line would connect the Indira Gandhi International Airport Terminal-3 to 21 Dwarka.
In addition to the maintenance and effective expenditures of the assets owned by DMRC, the funds are also required for carrying out regular and much-needed refurbishments of the old assets while considering new ones. These funds will also play a crucial part in maintaining their useful lifecycle and replacement of old assets, worn-out rails, and telecommunication assets, just to name a few.