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The Andhra Pradesh government is toying with the idea of executing the Rs 12,100 crore (Rs 121 billion) Hyderabad Metro Rail project on its own with assistance from the Union government.
The prestigious project was awarded to Maytas Infra Limited, a listed company promoted by the family of Satyam Computer Services founder B Ramalinga Raju.
However, Maytas failed to achieve financial closure for the project as per schedule in March 2009 and urged the government to extend the deadline by six months.
Following this, the state government is now faced with three options -- to give an extension for Maytas, go for fresh tenders or take up the project on its own.
With the fragile financial condition of Maytas, which found it difficult to achieve financial closure, the first option was ruled out. Finding new partners would be difficult in view of the difficult market condition. Hence, the government was in favour of executing project on its own, official sources told Business Standard.
With the Centre willing to part-fund the project, the state government would not find it that difficult to take the project further, the sources indicated.
In this context, they referred to the recent statement of Union minister for Urban Development S Jaipal Reddy that the Cental government would bear about 50 per cent of the cost with funds from Jawaharlal Nehru National Urban Renewal Mission to build the Hyderabad metro rail, on the lines of the Delhi Metro Rail.
Though there is no formal announcement to this effect, people in the know confirmed that top officials from the government met recently and were in favour of cancelling the project to Maytas and look at the alternatives available.
Hyderabad Metro Rail Limited chairman CVSK Sarma, however, said, "No decision is taken on this matter."
Maytas Infra also stated it 'is committed to complete this prestigious project and all steps towards its financial closure are being taken.'
HMRL, a special purpose vehicle formed to implement the metro rail project, had finalised a Maytas led consortium comprising Nava Bharat Ventures Limited, Italian-Thai Development Plc and IL and FS for executing the project on July 23 last year following an open bidding process.
The consortium committed to contribute Rs 30,311 crore (Rs 303.11 billion) during the 34 year concession period including Rs 11 crore (Rs 110 million) on agreement, Rs 50 crore (Rs 500 million) on financial closure, Rs 200 crore (Rs 2 billion) in the fourth year, Rs 100 crore (Rs 1 billion) each in seventh, eighth and ninth year and Rs 1,750 crore (Rs 17.5 billion) per annum from 18th year to 34th year.
As per the concession agreement, the Maytas consortium was supposed to pay Rs 240 crore (Rs 2.4 billion) to the state government for failing to achieve financial closure by the stipulated time.
However, the government kept the decision on the extension pending in view of the simultaneous assembly and Lok Sabha elections.
Chief Minister YS Rajasekhara Reddy is currently in New Delhi to meet Prime Minister Manmohan Singh and other Union ministers. Among others, the rail project also figured in his agenda. A decision on the project would be crystallised after discussion with various officials there, the sources added.
