Hyderabad, Nov 3 (IANS) The Andhra Pradesh government has threatened to initiate defamation proceedings against Delhi Metro Rail Corporation (DMRC) Managing Director E. Sreedharan for making “unfounded” allegations over the Hyderabad Metro Rail project. As Sreedharan failed to tender an unconditional apology for making the allegations, the state government would have no option but to sue him, K. Rosaiah, minister for finance told reporters here Monday.

The state government on Sep 22 demanded an apology from Sreedharan for calling Hyderabad Metro Rail project a “scandal”. It also removed him as the consultant for Hyderabad Metro project.

Though DMRC issued a denial the same day, the state government was not satisfied as the text of Sreedharan’s letter was already carried in a section of media.

Sreedharan in his letter to Planning Commission Deputy Chairman Montek Singh Ahluwalia, had expressed reservations over the way the government awarded the contract to the Maytas-led consortium.

Sreedharan had remarked that making “available 296 acres of prime land to BOT (build, operate and transfer) developer for commercial exploitation was like selling the family silver”. He also felt that the land concession could lead to a “big political scandal some time later”.

The DMRC chief’s allegations caused embarrassment to the government as the opposition parties, who had made similar allegations, claimed that their stand was vindicated.

Maytas-led consortium has been awarded the contract to build the ultra modern rail system at an estimated cost of Rs.121.32 billion on a BOT basis in public private partnership (PPP) mode.

The BOT developer agreed to pay Rs.303.11 billion to the state government over the concession period of 35 years, which could be further extended by another 25 years.

The finance minister reiterated that the contract was awarded in a transparent manner and even the Planning Commission appreciated the process and termed the project a model for the entire country.

According to Hyderabad Metro officials, Sreedharan had been fully participating, and giving his advice in preparation of reports, tenders and bids but he never raised any objection or doubt earlier.