CAG Report Highlights Rs 71 Crore Allocation for Mumbai-Pune Expressway
A recent report from the Comptroller and Auditor General of India has criticized the Maharashtra government for granting a revenue waiver of ₹71.07 crore to the toll operator of the Mumbai Pune Expressway during the COVID-19 lockdown. This report, which focuses on compliance audit, was presented in the Maharashtra legislature on Friday. The findings raise concerns about the financial management of the Mumbai Pune Expressway Limited (MPEL), a government entity, and its dealings with IRB MP Expressway Private Limited, the toll operator.
Details of the Agreement
The Mumbai Pune Expressway Limited, overseen by the Maharashtra State Road Development Corporation (MSRDC), entered into a sub-concession agreement with IRB MP Expressway Private Limited. This agreement, effective from March 1, 2020, to April 30, 2030, involved a total sub-concession fee of ₹8,262 crore. The upfront payment of ₹6,500 crore was due on the agreement’s commencement date, with the remaining ₹1,762 crore payable over the next three years. Toll collection began on March 1, 2020, coinciding with the onset of the pandemic, which significantly impacted revenue generation.
Insurance and Force Majeure Clauses
According to the report, the agreement stipulated that IRB was responsible for maintaining adequate insurance coverage for third-party claims and force majeure events, which include natural disasters and epidemics. The report highlighted that IRB failed to secure insurance for such events. When the COVID-19 lockdown began on March 23, 2020, toll collection was disrupted, qualifying as a non-political force majeure event under the agreement. Despite this, IRB sought compensation from MPEL for the revenue losses incurred during the lockdown.
Controversial Compensation Decision
Initially, MPEL rejected IRB’s request for a waiver, citing the relevant clauses of the agreement. However, after further appeals from IRB, MPEL’s Board of Directors convened on April 20, 2020, and agreed to compensate IRB for a calculated revenue loss over 25 days, amounting to ₹71.07 crore. The CAG report contended that this decision violated the agreement’s provisions regarding force majeure events and constituted an undue favor to IRB.
Recovery Efforts and Mediation Outcome
Following the dispute over the compensation, a mediation report dated October 13, 2023, recommended that IRB return ₹71.06 crore to MPEL. In December 2023, the Maharashtra government announced that recovery efforts for the ₹71.07 crore had commenced. MSRDC has been instructed to recover the amount from IRB within three months, indicating the government’s commitment to rectifying the financial irregularities highlighted in the CAG report.
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