L&T's letter to Govt for Project Takeover
This can’t be a routine letter. The 8-page letter is provided below with each page an image. I managed to get from a friend in the media.
Subject: Hyderabad Metro Rail: Project Takeover Proposal
The letter by L&T Metro’s MD, Mr. Gadgil, to the MD of HMR is dated 10th September 2014. It runs into 8 pages. In the letter, Gadgil cites 7 letters of correspondence between L&T, HMR and Chief Minister of erstwhile AP between 6 February to 15 July 2014. He raises two main issues in the letter. 1. Delay in providing Right of Way (ROW) for faster execution of works as per the Concession Agreement. Providing ROW is the obligation of the Govt of AP/T. 2. He raises the changed circumstances in the status of Hyderabad due to division of AP and its adverse impact on the financial viability of the metro.
In point 16, it is argued that “Prior to bifurcation of Andhra Pradesh, Hyderabad was the capital city of a state which was well developed, espousing various eminent districts and port towns. However, now it is the capital city of a smaller state with lesser resources than the undivided Andhra Pradesh……Further, there is reduction in the strength of representation of the State in the Parliament. Thus, the position of Hyderabad in drawing investments, both the Central Government and private sector has altered. Consequently, the potential returns from its real estate will get reduced…The change in the status of Hyderabad has resulted in a significant change in the economic and political outlook of Hyderabad, thereby causing material adverse impact on the financial viability of the Project”.
L&T did not think that AP will be divided. In point 22, he mentions that various agitations have been made, without any success, for creation of Telangana. So, we could not anticipate the bifurcation of AP till the AP Reorganisation Bill was introduced.
L&T seems to have hoped that the GHMC will be made a UT. In point 23(iii) he mentions that the creation of Greater Hyderabad in 2007 was viewed “as a precursor to converting the city into a Union Territory, if the state was split”.
In point 24, he states …”it would be most appropriate that the GoT should take over the Project and the underlying contract from the Concessionaire. The GoT should do so by restituting the Concessionaire in a manner whereby the Concessionaire’s property and entitlements are returned to it”.
If the L&T continues with this project it has to explain how it will become financially viable hereafter.
This group has posted the L&T letter, read and let us know what L&T wants fro Govt of Telangana.
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Metro gives Larsen & Toubro monopoly over city transport
While Hyderabad metro rail is expected to be the panacea to the growing traffic congestion in the city, the urban rail services can sound the death knell to other public transport systems already in place in the city due to a monopoly clause granted by the state to Larsen & Toubro, the private partner, through the concession agreement.
The clause in the concession agreement restricts the government from developing or improving the public transport system along the stretch of the three corridors- Miyapur to LB Nagar (corridor-I), Jubilee Bus Station to Falaknuma (corridor-II) and Nagole to Shiplaramam (corridor-III) - where the metro rail is taking shape. This would mean that there would be no scope for the improvement of the city bus service or MMTS (Multi-Model Transport System) that has emerged as a popular mode of urban rail transport.
The concession agreement says: "The government shall not construct any rail or road transport system between, inter alia, the three metro corridors" for a period of 35 years from the date the metro rail becomes operational. Further, L&T is entitled to an additional concession period of another 35 years. That means that the state government cannot develop any other public transport system for over 70 years without the consent of the private engineering company.
More startlingly, the concession agreement even restricts the government from revising the fare for the public transport or extending discounts or reductions in the fare and in the event of breach of these provisions, the government is liable to pay compensation to L&T under the latter's terms.
This clause can go against the state government and can end up acting against the interests of the commuter for whose benefit the metro rail has been conceived. This is because at a delay of Rs 5 crore per day in the construction of the project, keeping in mind the factors of the prevailing rate of inflation, insurance, currency fluctuation and rate of interest on the escalated project cost, the basic fare of the metro rail is expected to be around Rs 14 as of April 1, 2016. This would mean that the commuter would have to pay a high price for travelling on the metro rail even as the state would be helpless in improving the other modes of transport.
Charging that these provisions of the concession agreement are in violation of the Competition Act 2002, members of civil society, who have already petitioned the AP High Court against Hyderabad Metro Rail Limited (HMRL) on the charges of changing the alignment unilaterally, are now mulling moving the Competition Commission. "The provisions made in the concession agreement are monopolistic and are in defiance of the Competition Act. We are planning to complain to the Competition Commission," said Prof C Ramachandriah, who is spearheading the agitation against metro rail project.
While citing a similarity of the Hyderabad metro rail case with that of the Bangalore International Airport (BIA) that is facing a case under the Monopolistic Trade Practice Act after it insisted upon the closure of the government-run HAL airport in the city, Ramachandriah said curtailing the growth of public sector companies to suit the needs of private companies was unfair. A petition filed by Vivek Kulkarni, a former IAS officer, against BIA, is pending in the Karnataka high court.
However, authorities in HMRL said the metro rail service would only supplement the existing public transport system, and, hence, would not violate the Competition Act. "We are making use of the city buses as the feeder service for the metro rail. There is no question of treating it as our competitor," said a senior officer in the HMRL. An e-mail query to the L&T did not elicit reply.
http://timesofindia.indiatimes.com/city/hyderabad/Metro-gives-Larsen-Toubro-monopoly-over-city-transport/articleshow/12888108.cms
Does this clasue means, Bus Transport in Hyderabad can not be improved or the MMTS-2 which is now taking shape, giving tough time to L&T METRO
Hyderabad Metro project may get delayed by 18 months: LTMRHL
"There is a delay in the project due to various reasons. The present projection is that we are likely to complete the project by December 2018. Earlier, it was projected that we would be able to complete it by July 2017," MD and CEO of L&T Metro Rail Hyderabad Ltd (LTMRHL), V ..
http://economictimes.indiatimes.com/articleshow/52107763.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
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L&T Hyderabad Metro Rail, a subsidiary of Larsen & Toubro which is implementing the Rs 16,000-crore elevated metro rail project here, today said the work is expected to be delayed by almost 18 months.
"There is a delay in the project due to various reasons. The present projection is that we are likely to complete the project by December 2018. Earlier, it was projected that we would be able to complete it by July 2017," MD and CEO of L&T Metro Rail Hyderabad Ltd (LTMRHL), V B Gadgil told reporters.
S N Subrahmanyan, Deputy Managing Director and President, L&T and Chairman of LTMRHL said they are in discussions with the government on the delay and possible financial implications on the project.
"Naturally, the talks are going on with the government. Let's see how we will take it forward," Subrahmanyan said, when asked whether the concession period would be extended by the government due to the delay.
The company has so far pumped in Rs 9,000 crore into the project, including Rs 2,700 crore equity component, A senior official of LTMRHL said adding the project includes constructing a 72-km elevated metro rail and development of retail space.
Meanwhile, it was informed Shivanand Nimbargi is set to take over as MD and CEO of LTMRHL on May 31. Prior this, he was the holding the same posts at Sembcorp Green Infra Ltd.
http://economictimes.indi...