The Karnataka government on Wednesday decided to remove the beleaguered Maytas Infra - a firm associated with the fraud-hit Satyam Computer Services - from the two greenfield airport projects at Shimoga and Gulbarga.
“We have decided to call for fresh tenders for the airport projects at Shimoga and Gulbarga. Fresh bids will be called soon to ensure the infrastructure projects are completed on schedule,” Chief Minister B.S. Yeddyurappa told reporters after an investment committee meeting here.
The Hyderabad-based Maytas-led consortium, comprising Nagarjuna Construction Corporation (NCC) and Vienna International Airport (VIE) India Project Development & Holdings, was awarded the two projects by the BJP government in a global bidding.
"We will call for new bids to replace Maytas as we want the two projects to be implemented soon," Yeddyurappa added.
Each airport project is estimated to cost the consortium Rs.1.1 billion (Rs.110 crore).
Maytas is headed by B. Teja Raju, son of disgraced founder and former chairman of Satyam Computer Services B. Ramalinga Raju.
Maytas is a listed firm, and the Raju family holds 36 percent equity stake in it.
“A final decision to cancel the contract awarded to the Maytas-led consortium and timeline for re-tendering will be taken at a meeting Thursday to review infrastructure projects in the state by Chief Secretary Sudhakar Rao,” an official in the Chief Minister's Office said.
The state government had decided to lease to the consortium 662 acres of land near Shimoga, the home district of the chief minister, and 567 acres of land on the outskirts of Gulbarga in the backward region of north Karnataka for the airport projects.
Ever since the Rs.70-billon (Rs.7,000-crore/$1.43 billion) Satyam scam surfaced Jan 7 and Maytas came under scanner of the investigative agencies, the state government has been concerned over the timely completion of the projects though the financial closure is slated for March.
The government, which earlier agreed to provide loans to the company from the state-run financial institutions KSIIDC and KSFC before the Satyam scam broke out, dropped the move as it is considered too risky.
Maytas is also part of a consortium building the 10-km elevated highway on Hosur Road to connect Electronic City in India's IT hub.
Being implemented under the public-private partnership (PPP) model, the project is jointly promoted by the state government and the National Highway Authority of India (NHAI), with IT industry participation.