The Andhra Pradesh government has decided to cancel Hyderabad metro project worth Rs 12,100-crore awarded to Maytas Infra Limited last year. The company, owned by the sons of the disgraced Satyam Computer Services Limited founder chief B Ramalinga Raju, failed to achieve financial closure, even after the expiry of the stipulated time in March.

Anam Ramnaryana Reddy, the municipal administration and urban development minister of AP, said: "A consortium led by Maytas Infrastructure which was awarded the contract is unable to start the project for various reasons. All agreements between Maytas and government now stand cancelled."

He said that government will not return Rs 71 crore paid by Maytas Infra to the government, and added that the government may announce re-tendering of the project after the meeting of the state cabinet on July 13.

The Chairman of Maytas Infra Limited, K Ramalingam, recently held a meeting with AP Chief Minister, YS Rajasekhara Reddy, to discuss the prospects of the project. However, he failed to give any assurance about the performance guarantee or financial closure.

The consortium led by Maytas had bagged Metro Rail project in August, and instead of asking for any help from government, it made an offer to pay Rs 30,311 crores in three installments to the government.