Officials push for Maytas

The Chief Minister, Dr Y.S. Rajasekhar Reddy, is likely to take a decision on the Metro Rail on Monday even as he came under pressure from a lobby of officials to retain Maytas Infra, which is in trouble following the scam at Satyam, as the project’s builder.

If the government cancels the deal, it will have to build the project on its own with Central assistance. The second highest bidder, the Magna Almore-led consortium, has conveyed its disinterest in the project. Maytas’ efforts to rope the Reliance scion, Mr Anil Ambani, into the project too did not materialise.

The lobby of officials pushing the case of Maytas Infra is hyping the fact that its bankers have decided to restructure the debt repayment and provide Rs 100 crore working capital to the company. The lobby is also projecting a willingness letter that Maytas has obtained from the Singapore-based Concept to Commissioning Consultant to participate in the project as an incentive.

A senior official pointed out: “Maytas has to produce performance guarantee of Rs 240 crore for which it has to shell 10 per cent. It has to convince banks to stand guarantee for the remaining 90 per cent.”

“It may be prudent for company to mobilise Rs 24 crore and pay the bank than lose Rs 70 crore to the government by preferring cancellation of the project,” he said.
Market circles rule out the possibility of banks standing guarantee to Maytas for such a huge amount. “As it is the market is badly hit by the slowdown.

Particularly after the Satyam fiasco, no bank will agree to stand guarantee even for 10 per cent of the amount leave, about 90
per cent,” said the senior vice president of a leading IT space provider. On the other hand, the government is coming under increasing pressure from the Centre, though indirectly, to cancel the deal with Maytas Infra.

The Union urban development minister, Mr S. Jaipal Reddy, has repeatedly announced the Centre’s readiness to fund the project.
The Union minister has agreed to bear the state’s component also if the project is put up for Central funding in addition to the already agreed-upon Viability Gap Funding of Rs 4,000 crore.