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| Section of UPA wants Hyderabad metro award to Maytas scrapped |
| BS Reporter / New Delhi Jan 15, 2009, 00:55 IST |
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As a fallout of the financial irregularities in Satyam Computer Services, a section of the United Progressive Alliance (UPA) government is in favour of cancelling the award of the Hyderabad Metro Rail project. The project was won by the Nava Bharat-led consortium, in which Maytas Infra, a listed firm related to Satyam’s promoters, is one of the partners.
 Maytas, which is run by the older son of disgraced Satyam founder Ramalinga Raju, is also under government scrutiny and the Registrar of Companies (RoC) is investigating its role in the fraud in the Hyderabad-based software services firm to which Raju confessed January 7.
“There is a feeling that the government should come clean on its dealings with a company that is closely associated with Satyam promoters,” said a minister.
The Nava Bharat consortium attracted considerable attention after it emerged the lowest bidder in July 2008 by quoting a “negative grant” of Rs 1,240 crore (that is, it would pay the government money for executing and running the project and did not require a subsidy) by raising funds from real estate along the metro route. Infrastructure Leasing and Financial Service Ltd (IL&FS) and Italian-Thai Development Public Company Ltd, Thailand’s largest civil and infrastructure construction company, are the other two partners of the winning consortium.
The Nava Bharat consortium’s bid had attracted controversy after E Sreedharan, head of the Delhi Metro Rail Corp Ltd (DMRC), which was the project consultant for Hyderabad Metro Rail, opposed the concept of leveraging a land bank to finance the metro project. He warned that this model would erupt into a full-fledged political scandal. The Andhra Pradesh government subsequently dismissed him.
Planning Commission sources reveal that the project was originally estimated at around Rs 11,800 crore. “To show their intention, Maytas handed over a cheque of Rs 150 crore to the government on the day the project was awarded to them,” said a government official.
Although there is no movement yet in the Planning Commission to make a fresh project report on the Hyderabad metro, top officials of the Commission believe a fresh estimate may peg the cost of the project at over Rs 15,000 crore.
“In the earlier estimate, not only the amount of land but also its price was not taken into account properly. Any new estimate will have to include the cost of the land required for the project,” said a senior Planning Commission official.
Meanwhile, the Communist Party of India (Marxist) — former supporters of the UPA — today demanded a probe into the business dealings and finances of Maytas Infra Ltd and Maytas Properties Ltd. The party, together with the CPI, has 15 MLAs in the state Assembly and has clinched a major seat-sharing agreement with the Telugu Desam Party (TDP) for the next Lok Sabha elections.
The CPI(M) Politburo demanded that Prime Minister Manmohan Singh order a “high level probe into the various projects sanctioned to the Maytas companies in Andhra Pradesh along with the investigation into the affairs of these two companies”.
Auditor finds Maytas bank balances in order
S R Batliboi, the audit arm of Ernst & Young, has conducted an independent check on the bank balances of Maytas Properties and Maytas Infrastructure after the Satyam fiasco and has found that 100 per cent of the bank balances of Maytas Properties are in place. In the case of Maytas Infrastrcuture, 93 to 94 per cent of the deposits have been verified.
This number could go up further, said a source close to the developments, once the checks are complete. Unless the bankers stop giving money or the companies have no projects to execute, SR Batliboi officials said the firm will not disengage as the auditor of the two companies. Both companies retained Batliboi about a year ago.
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