Shadow over Hyderabad Metro project of Maytas-led consortium

The Satyam debacle is likely to cast a shadow on the fate of the Hyderabad Metro project that was awarded to a consortium led by Ramalinga Raju-promoted Maytas Infra...

The Satyam debacle is likely to cast a shadow on the fate of the Hyderabad Metro project that was awarded to a consortium led by Ramalinga Raju-promoted Maytas Infra. The Committee of Secretaries CoS on infrastructure is scheduled to meet soon to decide on a viable policy for funding metro rail projects in the country.

The recent turn of events will come up for discussion in the next meeting of CoS on infrastructure,which has thrown up some important questions related to the Hyderabad Metro projects funding, said Urban Development Secretary M Ramachandran.

The Maytas Infra Ltd-led consortium had bagged the countrys first urban transit project on the public private partnership PPP mode by quoting a negative grant to the Andhra Pradesh government in July 2008.

The company has now been put under government scrutiny under the Companies Act. While the fate of the Hyderabad Metro is unclear,what is certain is that it is likely to impact the governments infrastructure funding policy. The consortium Maytas,Navabharat Ventures Ltd,Ital Thai Development Public Company and ILamp;FS had offered the state government Rs 1,350 crore net present value for the Rs 12,500-crore Hyderabad Metro Rail Project to be implemented on a build,operate and transfer basis over a concession period of 35 years.

The consortium hoped to leverage the 18-20 lakh square feet of real estate,available in and around Metro rail stations,for commercial development and ensure a sizable revenue stream. It had also refused a viability gap funding up to 20 per cent of the project cost offered by the government.

Experts says that globally,metro rail projects are not a viable proposition through fare box collections alone and it is difficult to sustain operations without some extent of viability gap funding.

In fact,the Ministry had earlier sought a detailed business plan of Hyderabad Metro project from Maytas Infra,which the company never submitted,Ramachandran told The Indian Express. Ruling out any intervention by the Central government,he said there is a possibility that the project may be re-bid. In that case,the re-bids may not be as good. The viability gap funding will have to be substantially higher if re-bid, he said.