HYDERABAD: In a significant development, the State government here on Friday cancelled the letter of award (LoA) issued to the consortium led by Nagarjuna Construction Company to develop a multi-utility complex costing Rs. 1,065 crore at Andhra Pradesh Bhavan in New Delhi.
The award provided for construction of an Andhra Pradesh international convention centre consisting of star hotels, conference halls, guest houses and commercial malls, on the 20-acre site.
The Infrastructure Corporation of Andhra Pradesh (InCAP) issued the LoA to the consortium comprising NCC Infrastructure Holdings as the only other partner on October 6, 2008.
It laid down the condition that the consortium must execute the development and licence agreements within 60 days. The consortium accepted the LoA a fortnight later without prescribing any conditions from its side.
While cancelling the award, the government said the consortium had committed “various events of default” and failed to sign agreements with InCAP even though it was given a 15-day grace period after expiry of 60 days.
Instead, the consortium sought another 60 days time to sign the agreements without giving any reason.
Official circles attributed the silence and delay on NCC’s part to the present slump in the real estate business and the overall recession in the world.
K. V. Reddy, InCAP MD, told this correspondent that the consortium had defaulted on submission of performance security of Rs. 100 crore as a prelude to the agreements and also payment of Rs. 25 crore of “project development expenses” to InCAP as specified in the Request for Proposal document within the specified time.
Also, the consortium neither obtained the relevant certificates to commence business of the special purpose vehicle nor commenced legal documentation. Taking all these factors into consideration, the LoA was withdrawn without serving any notice to the consortium, Mr. Reddy said.