India’s state-owned National Highways and Infrastructure Development Corporation Limited (NHIDCL) has terminated the contract with Infrastructure Leasing and Financial Services (ILFS) for constructing the strategic Zojila tunnel in Jammu and Kashmir.

This 14.15km tunnel will provide all-weather connectivity between Srinagar, Kargil and Leh in the state and reduce the 3.5-hour long journey through the mountainous Zojila Pass to 15 minutes.

The NHIDCL cancelled the contract on 15 January and may call for new bids for the Rs68bn tunnel project, reported Press Trust India.

In a BSE filing, the troubled IL&FS Transportation stated: “The contract awarded for construction, operation and maintenance of two-lane bi-directional Zojila tunnel awarded by NHIDCL in the state of Jammu & Kashmir has been terminated effective 15 January.”

IL&FS Transportation is an entity of IL&FS, which defaulted on debt repayments as a result of reported financial mismanagement.

As of 8 October 2018, the group’s total debt was estimated to be Rs942.15bn.

“The NHIDCL cancelled may call for new bids for the Rs68bn tunnel project.”

In October, the group’s board was replaced by the government, which appointed new members to save the firm.

For the second time, NHIDCL terminated the contract for the tunnel project.

It previously terminated the bid of IRB Infrastructure. After this, fresh bids were called and IL&FS Transportation emerged as the lowest bidder in 2017.

The latest development comes only eight months after Indian Prime Minister Narendra Modi officially launched the work on the tunnel project.

The Zojila Pass is at an altitude of 11,578ft on the Srinagar-Kargil-Leh National highway. It is closed during winters as a result of heavy snowfall, which cuts off Ladakh region from Kashmir.

On 3 January 2018, the Indian Cabinet gave its approval to the Zojila tunnel project with Parallel Escape (Egress) tunnel between Baltal and Minamarg on the Srinagar-Leh section of NH-1A.

The project’s construction was expected to be completed in seven years.