PowerGrid to scrap Maytas Infra’s rural projects in Orissa, Bengal

PowerGrid to scrap Maytas Infra’s rural projects in Orissa, Bengal
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First Published: Mon, Feb 02 2009. 11 06 PM IST

Gridlock: At a 21 January board meeting, the corporation decided to seek legal counsel on cancelling the awarded contracts. Ramesh Pathania / Mint
Gridlock: At a 21 January board meeting, the corporation decided to seek legal counsel on cancelling the awarded contracts. Ramesh Pathania / Mint
Updated: Mon, Feb 02 2009. 11 06 PM IST
New Delhi: State-owned Power Grid Corp. of India Ltd, or PGCIL, has decided to revoke seven rural electrification contracts awarded to Maytas Infra Ltd, the infrastructure builder in which the promoters of fraud-hit Satyam Computer Services Ltd hold a 36.44% stake.
The projects, with a combined value of Rs395 crore, were awarded to Maytas Infra in Orissa and West Bengal under the rural electrifiation programme called Rajiv Gandhi Grameen Vidyutikaran Yojana, or RGGVY.
Gridlock: At a 21 January board meeting, the corporation decided to seek legal counsel on cancelling the awarded contracts. Ramesh Pathania / Mint
“Orissa and West Bengal have asked us to revoke the contracts given to Maytas. We have already sought legal opinion on the issue and plan to proceed with this course of action,” said a top PGCIL official, who didn’t want to be identified.
Maytas Infra has been under a cloud since Satyam founder B. Ramalinga Raju on 7 January confessed that he had misstated accounts to the tune of Rs7,136 crore, triggering India’s biggest corporate governance scandal. He was later arrested.
The Karnataka government said last week that it will cancel two airport projects being executed by Maytas Infra with Nagarjuna Construction Co. Ltd. London-listed Vedanta Resources Plc. has cancelled a contract with Maytas Infra for building a township for its staff in Jharsuguda, Orissa.
“Given the circumstances, it is an understandable decision which any board would have taken,” Anish De, chief executive at Mercados Asia, an energy consulting firm, said about PGCIL’s decision.
While a Maytas spokesperson promised a company comment on the development earlier in the day, no response had been received by the time this story went to the press.
“We had given Maytas an advance of Rs20 crore and work had started on two packages. We have already written to the Union power ministry regarding the same,” the PGCIL official said. “We even checked the bank guarantees submitted by them and found out that they were genuine.”
At a PGCIL board meeting on 21 January, the company decided to seek legal counsel on proceeding with the contracts awarded to Maytas Infra. “The legal opinion is that there is no problem in going ahead with exercising this option (contract revocation),” said another senior PGCIL executive, who did not wish to be identified.
Any delay in the electrification work will affect the Congress party-led United Progressive Alliance (UPA) government’s ambitious rural electrification programme, which had a target of providing electricity to 125,000 villages and connecting 23 million below the poverty line, or BPL, households across the country by 31 March. The rural electrification scheme has been faltering as reported by Mint earlier. RGGVY will reach only a little more than half the 125,000 villages it was targeted to cover. According to a senior power ministry official, only 55,000 villages have been electrified with 4.5 million BPL families being connected as on 15 January.
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First Published: Mon, Feb 02 2009. 11 06 PM IST