Hyderabad: Delhi Metro Rail Corporation (DMRC) managing director E Sreedharan calling the Hyderabad Metro Rail project a "scandal" in the making has caused embarrassment to the Andhra Pradesh government and has triggered upheaval in political circles.
Stung by Sreedharan's charges in a letter to Planning Commission Deputy Chairman Montek Singh Ahluwalia, the Congress government has sought an unconditional apology, failing which it threatened to sue him.
Sreedharan's letter, in which he expressed reservations over the way government awarded contract to Maytas-led consortium, is likely to provide ammunition to the opposition's attack on the government as they gear up for next year's elections.
The main opposition Telugu Desam Party (TDP), which announced a two-month long state-wide campaign from Oct 2 against corruption in the government, alleged that Chief Minister Y S Rajasekhara Reddy himself was involved in this "scam".
Sreedharan's objection to the way the government allowing private consortium to commercially exploit prime land has also brought into focus the sensitive issue of land.
Sreedharan, who served as a consultant for Hyderabad Metro project, remarked that making "available 296 acres of prime land to BOT (build, operate and transfer) developer for commercial exploitation was like selling the family silver". He also felt that the land concession could lead to a "big political scandal some time later".
"It is apparent the BOT operator has a hidden agenda which appears to be to extend the metro network to a large tract of his private land holdings so as to reap a windfall profit of four to five times the land price."
The opposition parties, including Praja Rajyam floated recently by Telugu superstar Chiranjeevi, were targeting the Congress government for selling government land to private companies in the name of mobilising resources.
Sreedharan's letter surfaced four days after the state government signed a concession agreement with Maytas-led consortium, which was awarded the contract to build the ultra modern rail system at an estimated cost of Rs.121.32 billion on a BOT basis in public private partnership (PPP) mode.
The BOT developer agreed to pay Rs.303.11 billion to the state government over the concession period of 35 years, which could be further extended by another 25 years.
"Mr.Sreedharan should tender an unconditional apology. Otherwise, we will take the legal course and file a defamation case against him," said C.V.S.K. Sarma, the municipal administration and urban development secretary. Sarma, who is also the chairman of the Hyderabad Metro , was addressing a news conference Monday evening.
Sarma said Sreedharan's comments had brought a bad name to the government and the project.
"The project is being done in a transparent manner and at every stage DMRC as prime consultant, has been fully participating, giving its advice in preparation of reports, tenders and bids. Not a single time did they raise any objection or doubt," he said.
Sarma said the government had saved Rs.100 billion as the DMRC had estimated that the grant could be as much if prime land exploitation was not permitted.
Though DMRC issued a denial late Monday, the state government was not satisfied as the text of Sreedharan's letter was already carried in a section of media.
"We would like to clarify that the DMRC neither smelt a scam in the way that the BOT contract was awarded for the Hyderabad Metro nor did E. Sreedharan, MD of DMRC say that the BOT model would backfire," the Delhi Metro said in a statement.
"Sreedharan had, however, pointed out that Hyderabad's success in BOT model should not be cited as an argument for changing the policy of the government for funding metro projects in the country," it said.
The consortium with Navabharat Ventures, Ital Thai and IL&FS as other partners refused to seek any grant from the government of India though the latter sanctioned Rs.23.63 billion or 20 percent of the project cost under Viability Gap Funding (VGF) scheme.
Expressing his concerns over the private sector's direct involvement in building the metro rail, the DMRC's MD cautioned that BOT mode could backfire.
"World-wide the experience has been that no metro project has succeeded so far on BOT basis. ...Our sole example of Mumbai Metro-I has not given us the required confidence in the BOT route," said the DMRC chief.
"The example of Hyderabad Metro is quite misleading as the negative viability gap funding has resulted solely on account of 296 acres of prime land being made available to the BOT operator for commercial exploitation."
Expressing doubts about BOT projects for being "expensive in long run", he said the "main beneficiary" in such projects would be the private party.
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