Hyderabad: The Maytas Infra Ltd-led consortium’s failure to achieve financial closure for the Rs12,312 crore Hyderabad Metro rail project has given fresh legs to an old enemy: activist groups that were against the project even earlier saying it would mean pulling down several heritage structures are now opposing any extension of the deadline.
According to an agreement signed on 19 September with the Andhra Pradesh government, the Maytas consortium was to achieve financial closure for the Metro rail project within 180 days of signing the deal. That deadline ended on 17 March.
The consortium also failed to arrange a bank guarantee of Rs240 crore, nor has it started making the daily payments of Rs24 lakh until it achieves financial closure, as agreed in the terms of the deal. The Maytas consortium has sought extensions from the state government for both the financial closure and the guarantee.
C.V.S.K. Sarma, chairman of Hyderabad Metro Rail Ltd and principal secretary, Andhra Pradesh Municipal Administration, said the government is currently considering the legal issues involved in either extending the deadline for financial closure or scrapping the project, because of the ongoing general election.
Maytas Infra is promoted and headed by B. Teja Raju, elder son of B. Ramalinga Raju, the jailed founder of the scandal-scarred Indian outsourcer Satyam Computer Services Ltd, who had admitted on 7 January to having fudged the accounts of the software firm to the tune of Rs7,136 crore over several years.
Following the delays, activist groups such as Citizens for Better Public Transport (CBPT) in Hyderabad, the Forum for a Better Hyderabad and the Human Rights Forum, which have been rooting for an underground system that would not harm existing structures, have now raised their voices against any extension by the state government.
C. Ramachandraiah, convener of CBPT and a social scientist with the Centre for Economics and Social Studies, admits the government has the authority to extend the deadline for the financial closure.
“(But) there is no provision for extension of the deadline for depositing the Rs240 crore of performance security amount in the concession agreement. While the government can extend the date for financial closure, it can be done only on a payment of Rs24 lakh a day, that too in advance, every week, as damages by the consortium.”
CBPT had filed a public interest litigation before the Andhra Pradesh high court on 26 August seeking to stay the project, claiming it did not have the required environmental clearances.
S. Jeevan Kumar, state vice-president, Human Rights Forum, is also demanding that the government scrap the project and start a fresh debate on alternative public transport options before awarding any projects to any company.
Both Kumar and O.M. Debara, general secretary, Forum for a Better Hyderabad, said any extension of the deadline for the financial closure would be against the provisions of the original agreement.
Ramachandraiah cited the state government’s decision to cancel the Rs1,065 crore multi-utility complex project at AP Bhavan in New Delhi awarded to a consortium led by Nagarjuna Construction Co. Ltd in February after it failed to achieve financial closure.
He pointed out the another Maytas-led consortium had “also failed in achieving financial closure for its Rs1,590 crore Machilipatnam deep-water port project even after more than a year after deadline”.
The Machilipatnam port project is coming up on India’s east coast between Kakinada port to the north and Krishnapatnam port to the south. The deadline for achieving financial closure for the project was in January 2008. The state government is currently considering asking other partners in the consortium, including Nagarjuna Construction, to revamp their equity holding structure and take up the project. Maytas Infra, meanwhile, is continuing its discussions with state government officials for extending the deadline for financial closure, said Anil Uttarwar, head of corporate communications at Maytas.
The company has begun the process of revamping the equity holding structure for the project among the consortium partners to expedite it without any hiccups in funds mobilization, he added.
However, P. Trivikram Prasad, executive director of Nava Bharat Ventures, the second largest partner in the consortium after Maytas, denied any such development. “No discussions were held among the consortium members and Maytas Infra did not approach us till date with the proposal of revamping equity holding structure among consortium members,” he said.