Nitin Gadkari has axed the IRB Infrastructure's Zojila tunnel project contract. In Picture: A tunnel [Representational Image]Flickr/richiegraham

Union Transport Minister Nitin Gadkari cancelled Wednesday a contract awarded to IRB Infrastructure to build the Zojila tunnel in Jammu and Kashmir. The project was reportedly worth Rs 10,050 crore (about $1.5 billion).

The road and transport ministry reportedly cancelled the contract without giving any reason. IRB infrastructure had been awarded the Zojila project in January 2015 after it emerged as the sole bidder, Reuters reports. Shares of IRB Infrastructure fell 4 percent after the deal was cancelled.

"We have no clue as to why," Virendra Mhaiskar, IRB's managing director, was quoted as saying by the agency.

The Congress — the Opposition party in the Lok Sabha — has been criticising the project; it has also accused Gadkari of violating India's anti-corruption rule. The road ministry has denied any wrongdoing.

It is believed IRB acknowledges investing in a company — owned by Gadkari about 15 years ago when Gadkari did not hold any public office. Congress general secretary Digvijay Singh has been quoted by Reuters as saying the past links between Gadkari and Mhaiskar should have been disclosed at the time of awarding of the project tender.

"The allegations have no base. The matter was rubbished by the ministry then and there," Mhaiskar told the agency.

The Zojila tunnel — the longest in Southeast Asia — is expected be of great socio-economic importance to the people of Jammu & Kashmir. IRB Infrastructure won the contract in a round of competitive bidding, the company had said in a regulatory filing in January.

The tunnel would be of strategic importance as it is located at an altitude of 3.528 metres and between Srinagar and Leh.

The company has said it will wait for the revised terms before it decides to bid again for India's most expensive road project.

IRB Infrastructure's stock was trading at Rs 224.30 at around 12:53 pm Thursday, down 0.36 percent from its previous close.

[1 lakh = 100,000 | 1 crore = 10 million | 100 crore = 1 billion]

Zojila Pass
The Zojila tunnel will be built between Srinagar and Leh, Picture: National Highway 1Den.wikipedia.org