Thursday, July 29, 2010

Sinha seeks to divert Rs. 250 cr of MADC money to Andhra-Serious violation of MADC mandate

Sinha seeks to divert Rs. 250 cr of MADC money to Andhra

Loyalty to Indu Group gets precedence
Compromise with Maharashtra’s interests
Serious violation of MADC mandate
Vidarbha farmers kept starving to fund Nellore Airport development
On-the-sly partnership with Andhra Governme

By Rahul Pande 

Though it may have been a proud announcement of a blue-chip development project by Andhra Pradesh Government on December 18, 2008, for Maharashtra it was a shocking issue to know that R C Sinha, Vice Chairman and Managing Director of Maharashtra Airport Development Company (MADC), has sought his company to divert clandestinely a plush sum of Rs. 250 crore for the development of Nellore airport. Needless to say, this precious money was being carved out of the funds of Multimodal International Hub Airport at Nagpur (MIHAN), the flagship project of MADC. 
Curiously, MADC had tied up with Indu Projects to execute the project and only common factor in both the companies is R C Sinha, who is Vice-Chairman and Managing Director of MADC and Director of Indu Group. Ironically, MADC was formed in 2002 as a special purpose vehicle (SPV) for execution of MIHAN project and adjoining Special Economic Zone. MADC was jointly formed with equity participation from City and Industrial Development Corporation Limited (CIDCO), Nagpur Improvement Trust (NIT), Maharashtra Industrial Development Corporation (MIDC), Maharashtra State Road Development Corporation Limited (MSRDC). Later, Nagpur Municipal Corporation also joined in. 
The very basic mandate of MADC is to play a lead role in planning and implementation of MIHAN project, keeping in mind key objectives. Its own mandate clarifies “MADC would also take up development of other Airports in Maharashtra, not belonging to the Airports Authority of India (AAI) and Indian Air Force (IAF), which will provide air connectivity between various important district Head Quarters and the Capital of the State.”
Keeping this objective in mind the Government of Maharashtra had liberally funded MADC and provided a whopping Rs 1000 million. MADC itself had authorised capital of only Rs 400 million apart from subscribed capital of merely Rs 150.50 million. The financial assistance of Rs 3000 million was extended by several public sector banks specifically for MIHAN project. 
From the beginning, high-profile Vice-Chairman and Managing Director of MADC R C Sinha had blamed everyone else for delay in take-off. Taking his words at face value, even the Civil Aviation Minister Praful Patel was targetted for delay in handing over Nagpur airport to proposed Joint Venture Company. But, the shocking revelation of MADC diverting funds for Nellore project in Andhra Pradesh, has badly exposed misfeasance and brazen violation of MADC mandate. It has also bared shoddy handling of MIHAN project and undue and unwarranted interest of MADC, and especially Sinha, in taking up projects in other states for companies in which he continues to be a director. Apparently keeping people of Maharashtra in dark, Sinha has signed Memorandum of Understanding with the Government of Andhra Pradesh. 
Andhra Pradesh Government, headed by Chief Minister YSR Reddy, accorded its approval to Nellore Airport development project in second week of December, 2008, and entrusted the work to MADC. Interestingly, Andhra Pradesh Government had selected Indu Group for airport development. However, to avoid the bidding process, the project was sought to be executed under the G2G (Government to Government) Model. 
Indu Group is partnering with MADC, which had submitted a proposal for Nellore Airport. MADC will hold 80 per cent equity while private partner (Indu Group) will have remaining 20 per cent. The Andhra Government had already sanctioned 2072 acre land in Dagadarthi village for Nellore airport. 
According to sources in know of things, MADC had committed an investment of Rs 250 crore and it had promised to complete the work in 36 months. Had the Maytas-Satyam scam not surfaced, Andhra Pradesh Chief Minister was all set to lay foundation stone of proposed Nellore Airport in mid-January 2009. 
MADC had agreed to share one per cent of gross revenue with Andhra Pradesh Government after a moratorium of 10 years and would also pay 1 per cent of the fair market value with a moratorium of 20 years. It would prepare plans for landing of Airbus 340 series of aircraft in future and some portion of the land would be given for non-aero purposes to shore up viability of the airport, Information and Public Relations Minister of Andhra Pradesh Anam Ramanarayana Reddy had informed the media after cabinet meeting. The terms and conditions for development would be similar to those offered to GMR Consortium for development of Rajiv Gandhi International Airport near Hyderabad. 
Surprisingly, MADC, and especially Sinha, had time and again refused liberal compensation to Cargo-affected farmers and offered a pittance as compensation for fertile land, citing non-availability of funds and apprehended that entire MIHAN would become unviable. But, the very same MADC has diverted its money to Andhra Pradesh, an act that defies its mandated purpose of existence.


MIHAN development? You must be joking Mr Sinha!! 

MIHAN, a so-called growth nucleus of India, with ultra modern international airport and passenger hub, has received Rs 000000000 during 2007-08. No, it is not a mistake. MIHAN received “a Big Zero” during financial year 2007-08 from MADC, which was specially formed to expedite MIHAN project. 
According to official information, MADC had budgeted a sum of Rs 31.20 crore for Nagpur airport development, but not a single penny was spent during entire fiscal. Since the airport was not handed over to MADC-led joint venture company, this might have happened. But, MADC had again made a financial provision of Rs 37 crore during current financial year for development of Nagpur airport (which was already developed by Union Civil Aviation Ministry through its PSU Airports Authority of India). 
In any case, the future international airport would be developed with the help of private player on the lines of Bengaluru, Hyderabad, New Delhi and Mumbai. For the current financial year, MADC has a budget of Rs 783 crore and proposed Rs 37 crore for Nagpur airport development and Rs 569 crore towards project expenses. 

During 2007-08, as against the budget of Rs 736 crore, MADC was able to utilise only Rs 477 crore and thus was unable to spend remaining Rs 259 crore. For various ongoing projects, MADC had allocated Rs 505.23 crore and could utilise only Rs 280.42 crore and thus was unable to spend Rs 225 crore.

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