HYDERABAD: The Cabinet on Wednesday approved a proposal to induct Navayuga Engineering Company Ltd (NECL) as the lead promoter of Rs.1,590-crore Machilipatnam Port Project, replacing Maytas Infra in the three-company consortium to which the work was awarded.

The Cabinet cleared the proposal following a representation by the special purpose vehicle, constituted to execute the project, citing the “serious financial crunch” faced by Maytas Infra, and the willingness of the two members -- SRE Infrastructure and Sarat Chandra Company, to Maytas' exit.

The proposal was approved amidst objections by Minister for Panchayat Raj Botcha Satyanarayana. According to sources, the Minister claimed that the proposal would set a wrong precedent.

But his objection was overruled by Ministers – K. Parthasarathy, P. Ramachandra Reddy, Vatti Vasant Kumar -- saying the project was already running behind schedule. They maintained that people of the area were losing faith in the government for the delay.

Sources said Mr. Satyanarayana was told that the law department had thoroughly studied the proposal and concluded that there was nothing wrong. All rules and regulations were followed while finalising the proposal.

The government had awarded the project to the consortium and signed the agreement with the SPV on April 21 in 2008.

The Cabinet noted that NECL fulfilled all financial/technical conditions in the “expression of interest” issued in 2005 and had vast experience in infrastructure and port projects with an annual turnover of Rs. 2,500 crore. While clearing the proposal, it took into reckoning the large green-field port developed by NECL at Krishnapatnam in record 18 months.

An official spokesman explained that the decision, apart from speeding up the project, would ensure investment of Rs 1,590 crore (revised cost of the project) and overall socio-economic development of Machilipatnam.

The cost of the project, which was originally estimated at Rs 1,255 crore, had been enhanced by Rs. 335 crore by the government, following shifting of the site selected for construction of the port, from Gogileru, near Machilipatnam, to Gilakaladinne, about 40 km away, on public demand.

Cost hike

The CAG report, which was tabled in the Assembly, has pointed out that the government allowed undue pecuniary benefit by allowing the same consortium to take up the project after the cost hike, without calling for fresh tenders.

Courtesy:hindu.com