Metro rail: contract with Maytas scrapped

Putting an end to weeks of uncertainty, the Andhra Pradesh government announced on Tuesday its decision to scrap the contract with the Maytas-led consortium to implement the Rs. 12,132 crore Hyderabad Metro Rail project.

It took this decision as Maytas Infra failed to achieve financial closure and deposit Rs. 240 crore as performance guarantee in spite of “ample time given by the government”. The 180-day-long deadline for complying with the conditions laid down in the contract, signed on September 19, was extended by 96 days.

Maytas Infra chairman K. Ramalingam had pleaded with Chief Minister Y. S. Rajasekhara Reddy on Monday to extend the deadline once again, but the latter refused to oblige on the ground that “there is no point in further delaying the prestigious project”. Moreover, Maytas, which ran into a financial crisis ever since its founder Chairman B. Ramalinga Raju landed in jail after the Satyam fiasco, could not fulfil its written assurance to achieve financial closure.

The Chief Minister held discussions with Municipal Administration Minister A. Ramanarayan Reddy, Chairman of Hyderabad Metro Rail Ltd. C. V. S. K. Sarma and Managing Director N. V. S. Reddy before coming to the conclusion that all permits given to Maytas-led consortium would be cancelled with immediate effect. The Minister later announced that the caution deposit of Rs. 60 crore furnished by Maytas and another Rs. 11 crore as the first instalment of future profit paid to the government would be forfeited in line with the agreement.

Maytas had projected the returns to the government at Rs. 30,311 crore over a 35-year period.

Dr. Reddy will convene a special meeting on July 13 to consider various options, including calling fresh bids, to ensure completion of the project during his current five-year term. Sources said that in scrapping the project, the government also went by two other factors -- Union Urban Development Minister S. Jaipal Reddy’s assurance that the Centre would share a half of the project cost and scope of getting assistance from India Infrastructure Finance Company Limited (IIFCL) which would refinance projects with investments upto Rs. 1 lakh crore.