Hyderabad: On the request of Megha Engineering Infrastructure Limited (MEIL), the state government has changed the tender conditions of the water supply improvement projects in nagar panchayats under package III of Mission Bhagiratha. The TS government has given administrative sanction for Rs 1,502.28 crore for water supply projects on lump sum contract on modified annuity mode of contract in 19 nagar panchayats under Mission Bhagiratha urban in three packages.
The tender called for package III comprising six nagar panchayats — Husnabad, Andole-Jogipet, Huzurnagar, Kodada and Devarakonda — at an estimated cost of Rs 163.85 crore. MEIL was awarded this contract. According to the conditions of the contract, a Special Purpose Vehicle (SPV) was to be formed. MEIL requested the state government to do away with the SPV because the cost of the project is very small and the formation of an SPV will not have any impact.
MEIL also said that the SPV needs to be maintained till repayment of the entire amount, that is, about eight or nine years. It said that arranging a bank loan on a newly formed SPV is a lengthy process and the time required for financial closure is about 120 days. MEIL said instead of formation of an SPV, it will give an undertaking in the form of board resolutions and funding for the project will be arranged from internal accruals of the company.
MEIL further said that at least four or five months of the crucial working period will be saved if the condition stipulating formation of SPV is relaxed, resulting in early completion of the project. The tender committee accepted MEIL’s request and recommended that the government approve the same. Accordingly, the government has given the green signal and directed the engineer-in-chief to enter into the agreement with MEIL by doing away with the SPV clause....