Date:08/01/2009 URL: http://www.thehindu.com/2009/01/08/stories/2009010857720100.htm

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Satyam crisis may hit city metro rail

HYDERABAD: Startling developments in Satyam on Wednesday has cast a shadow on the future of the Hyderabad Metro Rail Project. The Hyderabad Metro Rail Limited (HMR) has stated that it will be reviewing the Concessionaire Agreement (CA) signed with the Maytas-led consortium in September last year.

HMR Managing Director N.V.S. Reddy said that though the Build, Operate and Transfer (BOT) developer for the world’s biggest Public Private Partnership (PPP) project was fulfilling all its contractual obligations till date, legal implications and capabilities of the consortium will be studied afresh in view of the rapid events unfolding in Satyam.

Maytas Metro Limited (MML), the company formed by Maytas Infra, to build the metro rail project, had paid Rs. 11 crore as initial amount, besides pitching in with Rs. 60 crore in bank guarantee after the CA with the government. It was also discussing plans for construction work and preparation for the financial closure in March.

“We have nothing to do with Satyam, but now, it will be difficult to go ahead with the contract since Maytas is a related firm. We will definitely seek information from Maytas Infra before taking the next step. Whether to go for fresh tenders or to choose the next lowest bidder for the project will be decided by the government. However, the elevated metro rail project is very much on with much preparatory work already done,” said a senior official.

It was in July last year that the Maytas Infra-led consortium, including Navabharat, Ital Thai and IL&FS, sensationally bid for the 71-km, Rs. 12,132-crore project offering royalty of Rs. 30,311 crore spread across the contract period of 35 years with the present value of Rs. 1,240 crore even while refusing to take any of the Rs. 4,800 crore available under the Viability Gap Funding (VGF) when tenders were opened and vetted by a committee of top officials.

Rest of the four consortia in the fray were nowhere close to the audacious bid which practically meant the twin cities was to get metro rail free with the government too earning a sizeable revenue. The consortium with Maytas Infra holding 26 per cent stake, Navabharat 16 per cent and other two five per cent each, was banking on the 269 acres land to be made available during the contract period of 35 years for real estate development.

The government was to pitch in with 11 per cent equity participation of Rs. 250 crore and also a ‘Golden Share’ giving it veto powers. The showpiece PPP project has certainly stumbled.