L&T getting jittery over Metro Rail
Co. May Ditch Project Over Land Acquisition Delay
B Krishna Prasad, Times of India, Hyderabad, 15 Oct,2011.
A very interesting and also an encouraging news to the activists the top headline item that appeared on the Times of India, Hyderabad on 15 October 2011 probably reflects the current state of affairs regarding the Hyd metro rail project, and the frustration of the L&T company in executing the same. The news item says, among other things, -
- “several reasons like delay in land acquisition and pressure by local politicians for sub-contracts, for forcing it to re-consider going ahead with the project”.
- Independent director of L&T “complained to the government over the inordinate delay in the handing over of 269 acres of land as agreed upon in the agreement”.
- “facing pressure from several local politicians to allocate subcontracts to parties of their choice”.
- “the government penalty to L&T for the delay in the project stands at nearly Rs 60 crore”.
- L&T is "paying huge interest for the loans it secured from various banks after the financial closure for the project in March 2011”.
- L&T is "annoyed with the day-today interference in the execution of the project by HMR managing director N V S Reddy”.
- L&T team has been seeking an appointment with the Chief Minister for the past one month "but has been unsuccessful so far”.
Full item is given below:
Hyderabad: Construction giant Larsen & Toubro, the private promoter of the Hyderabad Metro Rail project, has stated several reasons like delay in land acquisition and pressure by local politicians for sub-contracts, for forcing it to re-consider going ahead with the project.
Independent director of Larsen & Toubro Metro Rail (Hyderabad) Limited, a subsidiary and a special purpose vehicle of the L&T Infrastructure Development Projects, and retired IAS officer Sheila Bhide, recently complained to the government over the inordinate delay in the handing over of 269 acres of land as agreed upon in the agreement. "Apart from land acquisition, we are facing pressure from several local politicians to allocate subcontracts to parties of their choice," said sources in the company.
According to the sources, the land acquisition process is the main reason for L&T having second thoughts about the project. As per the agreement, the Hyderabad Metro Rail Project (HMR), a government body, has to acquire the land for the project and hand it over to L&T. HMR in turn has entrusted the land acquisition job to GHMC. The 71.16 km-long rail project is to be constructed on three corridors, Miyapur-LB Nagar (28.87 km), Jubilee bus Station-Falaknuma
(14.78 km) and Nagole-Shilparamam (27.51 km) at a cost of Rs 12,132 crore and L&T bagged it in global bids floated by the state government after the project was cancelled, after Maytas the original promoter went bust post the Ramalinga Raju scam.
But as of date, the land acquisition process has not made any progress in areas including the Purani Haveli Road-Shalibanda stretch in Old City, the Greenlands-Ameerpet-Madhuranagar-Krishna Nagar stretch, Country Club at Greenlands (where a station is supposed to be located), Prakash Nagar, Begumpet (parallel to the old airport flyover), from Punjagutta to Lakdi-ka-pul and Madhapur. “This is not surprisng because the project had been envisioned by Ramalinga Raju as a realtyled one. After it went phut, the government should have reviewed the project and changed the routes. But it did not do so. Everbody knew that there would be land acqusition problems,” an analyst said.
To speed up the land acquisition, the government set up a committee comprising the Greater Hyderabad Municipal Corporation (GHMC) additional commissioner (development planning) K Dhananjaya Reddy, deputy collector for land acquisition, the executive engineer of the respective corridor and the Hyderabad Metro Rail general manager for land management. But even that has not helped in speeding up the land acquisition process.
L&T paying huge interest on loans
“We are also concerned over the delay in the land acquisition process,” B Sam Bob, principal secretary, municipal administration, told TOI.
Because of the delay in the land acquisition process, the L&T management is paying huge interest for the loans it secured from various banks after the financial closure for the project in March 2011. L&T Metro Rail (Hyderabad) Ltd has already submitted a performance guarantee of Rs 360 crore to the state government. A consortium of 10 banks led by SBI has sanctioned the entire debt requirement of Rs 11,480 crore and the equity component of around Rs 3,440 crore would be infused by the L&T group for the project.
The state should also have reasons to worry over the delay in the project, as if it does not hand over 90% of the land to the private promoter within 90 days of the payment of Performance Surety, the state would have to shell out Rs 36 lakh per day of delay in the project. The penalty clause came into effect on May 5 this year, and as of date, the government penalty to L&T for the delay in the project stands at nearly Rs 60 crore.
“Execution of the Metro Rail project is a highly skilled work and any deviation from the quality norms would doom it. Some works involving non-skilled activity can be given to local contractors, but not the major ones as is being demanded,” said the sources in the company. L&T is also reportedly annoyed with the day-today interference in the execution of the project by HMR managing director N V S Reddy.
To bring all these issues to the notice of chief minister N Kiran Kumar Reddy, an L&T team has been seeking an appointment with him for the past one month but has been unsuccessful so far. Miffed by the indifferent response, the company recently asked a senior cabinet minister to prevail over Kiran Kumar and ensure that he meets the company’s representatives. According to the minister, the CM assured him that he would meet the L&T team after the ongoing Telangana strike ends.
