Gurugram Municipal Corporation fails to pay for LED streetlights; Energy Efficiency Services Limited exits deal

Energy Efficiency Services Limited (EESL), a joint venture of state-run power companies, on Monday announced its decision to terminate the agreement with the Municipal Corporation Gurugram (MCG) over continuous payment defaults in the Gurugram Street Lights Project.

MCG owes EESL a total amount of Rs 21.08 crore and an addtional late payment interest of Rs 10 crore as of July 31, 2023.

EESL and MCG had signed a Memorandum of Understanding (MoU) in 2017 for the street light project. The deal was that MCG would make advance payments for LED lights to be installed.

While EESL started work in March 2018 and completed installing 55,000 lights by August that year, no payment was made by the MCG, they alleged. The first complement of part payments was made over a year after the first phase installation, EESL noted.

The venture noted that it had reminded MCG officials to clear dues but to no avail. Yet, EESL's contributions helped Gurugram save Rs 35 crore over the last five years.

EESL on June 21 issued a formal payment default notice to MCG and gave a 30-day cure period but neither was the default cleared, nor was a timeframe given for repayment, the venture noted.

As a result, a termination notice was issued on August 2, with a cure period of 30 days, which ended September 1. EESL now plans on initiating contractual and legal remedies to recover the payment default from the Gurugram Municipal Administration to recover losses and penal interests.