New Delhi/Hyderabad: The debacle at Satyam Computer Services Ltd is likely to hurt state-owned NHPC Ltd’s ambitious 800MW Parbati-II hydroelectric power project in Himachal Pradesh.
The tunnelling contract for the project was secured by a joint venture (JV) of Maytas Infra Ltd, in which the promoters of the tainted software firm hold 36.44% stake. Last week, Satyam’s chairman admitted to fudging the company’s books to the tune of at least Rs7,136 crore.
The contract for Parbati-II was awarded to Himachal Joint Venture—a joint venture of Sri Shankaranarayana Construction Co., Maytas Infra and Nagarjuna Construction Co. Ltd (NCC)—by NHPC in 2002. Maytas Infra has another JV with Bangalore-based Sri Shankaranarayana Construction, called SSJV Projects Pvt. Ltd, that was formed in 1994.
Down the drain? A hydroelectric power project in Arunachal Pradesh. NHPC is currently building 12 projects with a capacity of 5,322MW. Indranil Bhoumik / Mint
The tunnel contractors have diverted the advance amount for work to the real estate business of Maytas, said a person who was associated with the project. “They kept on taking advance on bank guarantees from NHPC. The advances are around Rs250 crore for the 21.23km concrete-lined head race tunnel for the project. Not even half of the work has been done. All that money was diverted to Maytas’ real estate business,” the person said, speaking on condition of anonymity.
The tunnelling contract for the project was valued at Rs419.8 crore with the overall project cost estimated at around Rs3,500 crore.
While S.K. Garg, chairman and managing director, NHPC, declined comment on the issue, a detailed questionnaire emailed to SSJV on 10 January remained unanswered, despite an assurance from an executive called Desai, who gave only one name and claimed to be speaking on behalf of Dayananda K., the company’s finance controller. Desai said over the phone that he was an assistant manager with the company. Sri Shankaranarayana Construction could not be immediately reached for comment.
A Maytas spokesman denied that an advance of Rs250 crore was given by NHPC and said: “So far, after award of the work in 2002 NHPC has given an advance of only Rs131.2 crore. Majority of the funds to the tune of Rs109.81 crore is towards purchase of tunnel boring machine, and other equipment (all hypothecated to NHPC) required for the tunnelling work. The balance amount of Rs21.39 crore was spent towards project execution.”
“The joint venture company has already completed 16km of tunnelling and lining work is in progress. The balance 5.233km of tunnelling is delayed due to extraordinary geological occurrences... NHPC have sought the services of international experts on addressing this issue, which should happen in next two months,” the Maytas spokesperson added.
However, the person associated with the project and quoted earlier in the story said: “While the main tunnel has around 6km of work left, no concrete lining has been done. They even got another advance of around Rs70 crore during May-June 2008.”
Y.D. Murthy, NCC’s chief financial officer, declined comment, saying he didn’t have the details handy.
While Satyam doesn’t own any stake in Maytas Infra and Maytas Properties Ltd, the real estate entity, the family of Satyam promoters led by B. Ramalinga Raju is the promoters of the two companies and own about one-third each in the two companies.
For the fiscal year ended March, Maytas Infra posted revenue of Rs1,764 crore and a net profit of Rs99.63 crore on an equity base of Rs58.85 crore. SSJV posted revenue of Rs135 crore during the period. The registrar of companies in Hyderabad, the ministry of corporate affairs and market regulator Securities and Exchange Board of India are conducting a probe into the books of Satyam, Maytas Infra and Maytas Properties.
They are investigating if there were any related-party transactions between these firms and whether the promoters benefited unduly. They will also investigate if money from Satyam was moved to the two Maytas firms.
SSJV Projects lists state-owned firms such as NTPC Ltd, Bharat Earth Movers Ltd, Water and Power Consultancy Services Ltd and Himachal State Electricity Board among its clients on its website. Seven of the 12 projects NHPC is working on have already been delayed due to unavailability of manpower and price disputes with private contractors working on the projects, as reported by Mint on 18 January.
It takes around five years to build a hydropower project after it is cleared for construction. NHPC is currently building 12 projects that will have a total capacity of 5,322MW.
A New Delhi-based power sector analyst, who didn’t want to be identified, said: “In contracts such as these, there is an advance and thereafter, all payments are linked to the percentage of job completed, with the final payment being given after completion of work. It will be interesting to understand the conditions under which the advance was given.”