With the prestigious Hyderabad Metro Rail project in jeopardy, Andhra Pradesh Chief Minister Y S Rajasekhara Reddy has rushed to New Delhi to save the project. The project has become an embarrassment for the Government as cash starved Maytas, which got the contract last August, is unable to start work.

The Government is yet to decide on whether to cancel the contract and issue fresh tenders or restructure the agreement to provide Maytas with tax-payers money to execute the project. “No decision has been taken yet. The matter is pending with the Chief Minister,” Hyderabad Metro Rail (HMR) Chairman and Principal Secretary, Municipal Administration Dr C V S K Sarma said. HMR sources said the Government is cold to re-tendering as it would increase the cost manifold. “Besides, none of the other qualified bidders are interested in taking up the project now,” HMR officials said.

Hence the most viable option, sources in the Municipal Administration Department said, is to restructure the agreement with Maytas. “Instead of cancelling the contract, the Government may rewrite the agreement. The negative viability gap funding concession agreement by which Maytas agreed to pay the Government Rs 33,000 crore over a period of 35 years is likely to be done away with and the government may agree to fund the project. For that the state government will need funds from the Centre,” an official said. Reddy is likely to discuss the issue with Prime Minister Dr Manmohan Singh and Union Urban Development Minister S Jaipal Reddy.

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