Maytas Infra Limited, promoted by the family of beleaguered Satyam Computer Services founder B Ramalinga Raju, has sought extension of time to achieve financial closure for the Rs 12,132-crore Hyderabad Metro Rail Limited (HMRL) project. The consortium was to achieve financial closure for the high-profile project today.
Having sought an extension, it will now have to deposit Rs 240 crore bank guarantee and get a 60-day breather by paying a penalty for achieving the financial closure. "I am yet to get full details if Rs 240 crore performance guarantee has been deposited or not,'' the company spokesperson said.
"The global recession and consequent credit squeeze in national and international capital markets has created a Force Majeure (a common clause in contracts which essentially frees both parties from liability or obligation when faced with an extraordinary event) situation. Besides, the ongoing PIL (public interest litigation) is having an extremely deleterious effect on our ability to achieve the financial closure," the company stated in a press release.
The PIL was filed by the Forum for Better Hyderabad, a non-government organisation, saying the project would affect the aesthetics of the city. "We are also affected by the global recession, and raising of debt (including ECB) is proving to be a challenge in this market," a company spokesperson said.
HMRL chairman CVSK Sarma said Maytas had asked for six months' time. "We will examine their request and also study the legal aspects involved in it,'' he said. On the penalty to be slapped on Maytas, he said it was too early to comment on it. Earlier, HMRL managing director NVS Reddy had said the decision on the project vested with government. "HMRL is only a facilitating agency,'' he pointed out.
The 71.6-km long metro rail project is envisaged to be executed on a build, operate and transfer (BOT) basis in a public-private partnership with the government's contribution predominantly being land. The government had issued the letter of acceptance for the project in August last year. HMRL, a special purpose vehicle, was formed to implement the elevated metro rail project in four years.
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Five consortia qualified for the bids but one (the GVK-led consortium) did not participate in the bidding. The bid was called for Rs 12,132 crore including Rs 318 crore state taxes component. A three-member committee, in which HMRL managing director NVS Reddy is a member, recommended the Maytas consortium comprising Nava Bharat Ventures Limited, Italian-Thai Development PLC and IL&FS for the metro rail project.
In fact, Andhra Pradesh chief minister YS Rajasekhara Reddy had been doubtful over the Maytas Infra-led consortium achieving financial closure by March 17. "Maytas had bid for the project when there had been a boom in real estate. Given the current situation on the real estate front, I don't think that banks would come forward liberally to finance the project," he had earlier said.
On the other hand, Maytas had earlier maintained it was on course to achieve financial closure and its partner IL&FS was tying up the finances. As per the bid agreement, the project was to be grounded within six months after it was awarded to the Maytas consortium in September last year. Maytas had already paid Rs 11 crore to the government at the time of agreement. It was to pay Rs 50 crore on financial closure and furnish Rs 240 crore bank guarantee as performance security by March 17.
The Maytas consortium did not seek any viability gap funding from the government and committed to pay Rs 30,311 crore to the government during the 34-year concession period for the project. The contribution by Maytas Infra to the government during the concession period brought to present value was Rs 2,463 crore. Another bidder, Magna Allmore, committed to contribute Rs 250 crore to the government through equity contribution in 2011 and 2013 (present value Rs 171 crore). Two other bidders - Essar and Reliance-led consortia sought a viability gap funding of Rs 3,100 crore and Rs 2,811 crore respectively.
Other than ticket fares, it proposed to build real estate property for leasing to make the metro rail project financially sustainable. Three depots - at Miyapur (100 acre), Nagole (100 acre) and Falaknuma (17 acre) - have been proposed and malls and commercial complexes would come up at these depots. In all, there would be 66 stations and about 50 per cent of them are to be built to support commercial activities. All these would have to be transferred to the government after the concession period expires. As many as 78 trains would ply on three sectors at a five-minute interval.
Earlier, consortium member Nava Bharat Ventures Limited informed that it had not undertaken any liability concerning the project nor had it any subsisting investment in the project. The company did not wish to speculate on the likely moves of the government concerning the project.