How IL&FS gave toll contract worth crores to sister firm

The Noida Toll Bridge Company Ltd (NTBCL), which charges toll fares on one of the routes connecting South Delhi to Noida, has stated that it is yet to recover Rs3,500 crore from hapless commuters who are forced to shell out money for smooth passage to and from India’s national capital.

dna calculates that by 2034, if the recoverable project cost increases at the same rate, commuters would be forced to pay thousands of crore rupees to satiate the never-ending thirst of the toll company.

Documents accessed by dna reveal shocking flaws in the conceptualisation of the project itself. NTBCL, the company that operates the bridge, was given the contract by its own parent company, Infrastructure Leasing and Financial Services Ltd (IL&FS) without any competitive bidding or tendering process. The parent company not just gave the contract to its own concern, but also laid down parameters for the project in addition to instructing democratically-elected governments of Delhi and Uttar Pradesh (UP) about their roles in the project.

“It is outrageous that a private company could award a contract to itself while two state governments just witnessed the event while being part of the same committee. This was daylight robbery right under the nose of the government,” says NP Singh of Noida Residents Welfare Association.

In the early 1990s, as the national capital’s streets were choking with traffic, a study by the National Capital Region Planning Board conducted a study that highlighted an urgent need to build a bridge across the Yamuna to ease traffic woes on the two other bridges connecting Delhi to Noida. Around the same time IL&FS, a company promoted by a group of prematurely retired IAS officers came into the picture.

On April 7, 1992, a Memorandum of Understanding (MoU) was signed between the UP government, Delhi administration and IL&FS for implementation of the toll bridge across the Yamuna. After the MoU, a Steering Committee was formed, and it had IL&FS on board. The Steering Committee decided to award the contract for the construction of the bridge to a company owned by IL&FS itself. Soon after the committee’s decision, IL&FS incorporated the Noida Toll Bridge Company Ltd (NTBCL). Its corporate office was established at Pilibhit House at Shahanajaf road in UP’s capital Lucknow.

IL&FS also set out terms and conditions that were completely skewed in its favour. Clauses were inserted that vouched for ‘private funding’ of the project. IL&FS became the biggest lender to its own project by lending over Rs180 crore.

It was also decided that IL&FS could decide the toll rates to be paid by commuters.

Toll rates on the Noida toll bridge have been increased by an average of 6% every year by NTBCL. Commuters who drive a car were paying Rs17 in 2006. In 2014 they are paying Rs28. By 2021 the toll would increase to Rs40. And if NTBCL’s plan of extending the period of extracting toll from commuters beyond 70 years fructifies, the toll would keep increasing exponentially every year in the near future.

Till date there has been no credible information on whether NTBCL really spent Rs408 crore in constructing the bridge. The project cost was determined by a Denmark-based consultant appointed by IL&FS. “There needs to be a thorough investigation into the actual project cost. Nobody knows whether the project cost was inflated by the company,” said Ranjit Saxena, an advocate with the Allahabad HC.

IL&FS and NTBCL directors did not reply to questions sent by dna. “They have the cake and are eating it too. Nowhere in the world has an important project been awarded in this manner to benefit a single company,” added Saxena.