On January 7th, GMR Infrastructure Ltd informed the Bombay Stock Exchange (BSE) that GMR Kishangarh Udaipur Ahmedabad Expressways Limited, a subsidiary of the Company, had terminated the concession agreement entered into with National Highways Authority of India (NHAI) for the US$1.2 billion six laning of 555 Km Kishangarh - Udaipur -Ahmedabad highway.

Days later GVK Infrastructure also pulled out of the Rs 3,000-crore ($559 million) Shivpuri-Dewas project in Madhya Pradesh. Both infrastructure firms cited problems with environmental clearances to proceed with construction of the projects.

In the case of GMR, it took NHAI to court to protect its bank guarantee of about Rs 260 crore ($48 million) with NHAI. Unlike GVK, GMR is willing to negotiate with NHAI. GMR has submitted a proposal to NHAI and it has some key demands. It is willing to pay the net present value of the premium it had offered to NHAI, but it wants to lower the premium payout in initial years, and increase the payouts in later years. It also wants compensation for project cost increase for delays in Environmental clearance and machines lying idle, according to local sources.

After meeting last week, the National Highways Authority of India (NHAI) Board has failed to arrive at a consensus to rework the terms of GMR's Kishangarh-Udaipur-Ahmedabad project. "Some members disagreed on the idea of re-working the terms to suit the needs of a particular developer," according to local sources.

According to the original project bid, GMR was supposed to pay a premium to NHAI for 26 years, with the premium being Rs 636 crore ($118 million) in first year. In subsequent years, the payout would have increased by 5 per cent.

The case will come up for hearing in Delhi High Court on April 30. The Court was informed about GMR's proposal to NHAI.