India-based GVK Power and Infrastructure has announced that its subsidiary, GVK ShivpuriDewas Expressway, has ended its concession agreement with the National Highways Authority of India (NHAI), for the construction of a major highway in the state of Madhya Pradesh.

The contract, which was estimated to be worth Rs40bn ($729.5m), involved converting the Shivpuri-Dewas section of National Highway 3 (NH-3) from three to four lanes, covering a stretch of 1,329.84 lane kilometres.

GVK Power said in a stock exchange filing that it is terminating the contract in terms of Clause 34.8 of the concession agreement, which according to experts, gives the concessionaire of a project rights to end the deal if the nodal agency does not show enough initiative to fulfil responsibilities as part of the agreement.

Some of the NHAI’s responsibilities include land acquisition and obtaining required approvals, such as environmental and forest clearances.

"The contract has a concession period of 30 years, including a construction term of 2.5 years."

In January 2012, GVK was awarded the contract, which was set to be executed under a build-operate-transfer model.

A part of the National Highways Development Project (Phase IV) of NHAI, the road project includes a portion of an important trade corridor linking Western and Central India to Northern India, according to GVK.

The contract has a concession period of 30 years, including a construction term of 2.5 years.

This move by GVK follows a suit of other major infrastructure companies in India who have terminated their contracts due to delays in implementation and funding.

GMR Infrastructure has recently terminated its concession agreement for a 555km highway project linking Rajasthan and Gujarat.

Several other road developers, such as Reliance Infrastructure and Madhucon Projects, have also announced plans to sell stakes in toll road projects, due to similar problems such as delays in land acquisition.