The newest state of the country, Telangana seem to be battling bifurcation blues. The Power problems and various doubts pertaining to the viability of businesses post the state division are posing severe problems for the states. L&T and GMR Group who are working with Telangana on Public Privater Partnership (PPP) model on the Hyderabad Metro and construction of Airports respectively are now reconsidering their bids. According to those companies, the viability of their businesses in Hyderabad is already hit and it will go down further after the city ceases to be the common capital.
It is said that these companies are in talks with legal experts regarding the invoking of the ‘Force Majeure’ clause in their MOUs which facilitate changing the terms of agreement in the event of risks that are beyond their control, adversely affecting the viability of the business. Recently Telangana government has informed the Finance Commission that the number of people visiting Hyderabad will come down drastically going forward. These companies are going to use that as a weapon in case of legal hurdles.
GMR group which is currently operating Hyderabad International Airport is in losses after airports regulator directing it not to collect user development charges. On the other side, Telangana government is planning two more airports in the state which makes their business more weak. So GMR is proposing the changes to the initial MOU by invoking Force Majeure. In case these companies succeed in their efforts, the brand value of Hyderabad will take a very severe beating.
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