Appreciate your view point.
I have gone through a paper from planning commission website suggesting various issue with Concession agreement of Noida Toll Bridge
The main concern expressed by author are:
1) it would open ended indefinte return of 20% offered to Noida Toll Bridge company without any equity risk being assumed by them and hence was unreasonable
2)The process followed was not transplant and ILFS has conflict of interest as advisor and promoter dual roll
However, I have following observation on above report
1) During 2003-2005, the company faced problem and debt was restrctured. If the agreement was so much one side loaded, Noida would not suffered losses in past. The main reason for loss was lower then expected traffice but ILFS did infuse new money in the company when it was in problem and we all know that the company underwent CDR for debt restructuring which it came out.
2) There are report which suggest that Noida Toll Bridge promoter ILFS was involved in drafting the concession agreement and has drafted this agreement which give indefinite freedom to the company to increase the tariff. While the mater would be decided in the court, one point which come my notice is equity stake of ILFS in Noida Toll Bridge. If ILFS knew that they have designed agreement in such a way that it would give hand some pay off to them, Why would they not own maximum equity stake? On the contrary to allgeation, ILFS hold around 25% stake in the company.
In case the tariff are abolished without adequate compensation to Noida, it would have major implications for infastructure investment in India. Tormorrow anyone can raise objection of unfair contact get same cancelled.
In view of above, I believe that while Noida Toll would not be able to get indenfinite term of tollng as originally envisaged concession agreement (which I believe due to being first contract of private public partnership then intenational attempt to get maximum from the people), it would also get return at around 15-16% IRR on the project. We may need to consider what value that comes to determine.
Discl: I have investment in the company and my view may biased. I am not legal expert and court/governement authority may take decision based on the fact to which I do not have access.