Hyderabad, Sept. 12 The Concession Agreement for the Rs 12,000-crore Hyderabad Metro Rail Project between the Government of Andhra Pradesh and the Maytas-Nava Bharat consortium that won the mandate for constructing the project would be signed in the next two weeks.

Simultaneously, they would also sign the shareholders’ agreement.

The consortium has reportedly submitted relevant papers with the Registrar of Companies here for formally registering the company.

The consortium is supposed to form the company to sign the agreement, kicking off the project.

Holdings

While the Government of Andhra Pradesh would have 11 per cent (not exceeding a sum of Rs 250 crore) in the company, the two major consortium partners (the one which showed the technical expertise and that which assured financial support by lending their balance sheets) would have 26 per cent each.

This primary arrangement could not be altered through the completion of the project and for five years thereafter.

They, then, could dilute up to 26 per cent after that five-year period. “The new company would have two directors (one on crossing the five-per cent stake and the other with the Golden Share) from the Government,” Mr N.V.S. Reddy, Managing Director of Hyderabad Metro, told Business Line.

The Golden Share gives the Government the right to veto any resolution passed by the Board that might go against public interest.

Both the agreements would put across certain binding clauses on both parties.

Binding clauses

These clauses would mean severe penalties for not achieving the prescribed milestones. Some clauses might even lead to cancellation of the award if the special purpose vehicle fails to complete the project within a prescribed time after the deadline.

The Government, on its part, needs to give right of way, access to the stations and shift of utilities along the route at its own cost. Besides, it should not take up any competing activity at the stations and shopping areas.

The consortium partners could sell off the remaining stake (other than their 52 per cent and the Government’s 11 per cent) to the interested parties at a premium. The Government, however, would have ‘tag along’ rights to sell part of its stake at that price.

Date : 13/09/2008

Courtesy : Businessline