New Delhi: Energy Efficiency Services Limited (EESL) has announced the termination of its agreement with the Municipal Corporation Gurugram (MCG) for the Gurugram street lights project due to persistent payment defaults.
The Street Lighting National Program (SLNP) was launched by PM Modi on January 05, 2015, with the objective of replacing conventional streetlights with smart and energy-efficient LED's across India. EESL has successfully installed 1.32 crore LED lights across the country, resulting in substantial energy savings, reduced green house gas emissions.
The MoU between EESL and MCG was signed on October 10, 2017 with the understanding that MCG will provide advance payments for the installation of LED streetlights. "EESL commenced work in March 2018, completing the installation of 55,000 lights by August 2018 in the larger public interest, despite payments not forthcoming from MCG", the company said in an official statement.
"It is notable that the first complement of part payments was made by MCG more than a year after the installation of the first phase", the statement added.
Approximately, 82,000 LED streetlights and around 800 centrally Controled and Monitoring systems (CCMS) have been installed by EESL with an impressive uptime of more than 98% despite consistent payment defaults by MCG. The total payment from MCG stands at Rs 21.08 Crore, with an additional late payment interest penalty of Rs 10 Crore as of July 31, 2023.
Despite these challenges, EESL has upheld its commitments and generated substantial cost savings of Rs 35 Crores for Gurugram over the past five years.
EESL said that the project became unsustainable due to MCG's failure to meet their financial obligations under the agreement. "EESL issued a formal payment default notice to MCG on June 21, 20 23 providing a 30-day cure period. However, MCG neither cleared the default nor provided a time frame for payment", the company said.
Consequently, EESL had no choice but to serve a termination notice on August 2,20 23 with an additional 30-days cure period until September 01, 2023.
EESL said that it will no longer be responsible for street lighting maintenance in Gurugram as MCG has failed to fulfill their commitment as per the agreements.
In the statement, EESL acknowledged its dedication to providing quality Street lighting services to Gurugram residents, despite consistent payment defaults by MCG, resulting in taxpayer savings of approximately Rs 35 crore over five years. EESL has now decided to initiate the contractual and legal remedies to cover the defaulted payments from Gurugram Municipal Administration.