Formula E-Prix: Telangana IAS officer Arvind Kumar issued memo over ‘serious violations’ in contract, ₹54 crore payment

The government has asked Kumar, former Special Chief Secretary of the MA&UD, to respond within 7 days, failing which action will be initiated.

ByAjay Tomar | Raj Rayasam

Published Jan 09, 2024 | 5:57 PMUpdatedJan 09, 2024 | 5:59 PM

Formula E-Prix: IAS Arvind Kumar had been with the MA&UD Department when the agreements were signed. (Supplied)

The recent cancellation of the 2024 FIA Formula E-Prix in Hyderabad has stirred controversy, leading to a memo being issued to Arvind Kumar, Telangana IAS officer and former Special Chief Secretary of the Municipal Administration and Urban Development (MA&UD) Department, citing “serious violations on his part” in connection with the agreements.

State Chief Secretary Santhi Kumari issued the notice on 6 January, questioning why ₹54 crore (including a tax amount of ₹9 crore) was disbursed from government resources without necessary approvals, even before the agreement was signed. Kumar is required to provide an explanation within seven days.

The cancellation of the Hyderabad leg of the Formula E-Prix’s Season 10, scheduled for 10 February, was announced by the motorsports body on 5 January, citing a breach of contract by the Telangana government’s MA&UD Department.

A multi-year agreement to bring the prestigious Formula E-Prix to Hyderabad was initiated by the previous BRS government, with then-MA&UD Minister KT Rama Rao playing a significant role.

‘Government to take action’

Meanwhile, the Telangana government has decided to take action against all those responsible for signing the tripartite agreement among Ace NextGen, Formula E and the state, as it resulted in the waste of public money, Deputy Chief Minister Mallu Bhatti Vikramarka said on Tuesday, 9 January.

Speaking to media persons at the state secretariat, Vikramarka said that there was not even an iota of truth that the state’s interest fell in peril after the cancellation of the Formula E race.

“The Opposition BRS has been crying hoarse that the cancellation of Formula E race has done incalculable harm to the brand image of Hyderabad, besides preventing flow of investments to the state,” the deputy chief minister said.

The Formula E race was cancelled by the company after the state government “unilaterally” terminated the agreement with it.

Bhatti Vikramarka said that the state government has already responded to the notice given by Formula E-race company asking the state to pay up ₹55 crore, which is the remainder of the ₹110 crore which has been agreed upon at the time of signing of the agreement.

“As the state government has already paid ₹55 crore, the company insisted that the state pay the balance of ₹55 crore, which we did not,” he said.

He said Ace NextGen, which was one of the signatories to the tripartite agreement, sold tickets and exited. The most ridiculous provision of the agreement, he added, was that the state has to get the Union government’s clearances for conducting the Formula E race besides paying the balance amount of ₹55 crore.

“The proposal was neither cleared in the Cabinet nor the file had the signature of the then MA&UD minister KT Rama Rao. The then special chief secretary of MA&UD Arvind Kumar, who was also commissioner of HMDA at that time, cleared the proposal, stating in the file that he was approving the proposal following telephonic instructions from the minister which was highly irregular and violative of the secretariat business rules,” Vikramarka said.

Vikrmarka said that, later when the original agreement was tweaked, Ace NextGen was not a signatory.

“I want to know why it had exited. The entire process adopted is suspicious,” he said, adding that it was the Ace NextGen that has to pay Formula E-race and not the government.

“The provisions of the agreement are being examined by legal experts and the state government will take action based on their opinion,” he said.

Also Read: Formula E cancels Hyderabad E-Prix over alleged contract breach by Telangana govt

Series of questions to Arvind Kumar 

A series of questions have been posed to IAS officer Arvind Kumar, including why the revised agreement for Season 10 of the Formula E event was undertaken during the Model Code of Conduct (MCC) preceding the Telangana Assembly Elections without the necessary permission from the competent authority.

Regarding the ₹54 crore amount (including ₹9 crore in taxes), he must explain why the money was disbursed from the Hyderabad Metropolitan Development Authority (HMDA) resources without obtaining the concurrence of the HMDA’s Board of Directors and the Finance Department of the state government, as stated in the memo.

The memo also questions why the HMDA was designated as the Nodal Agency “to host as well as conduct” the event without necessary government approvals.

Arvind Kumar has also been asked to explain entering the tripartite long-form agreement with Formula E Operations (FEO) and a private organiser without obtaining mandatory approvals.

Furthermore, he has been questioned on why the consequences of dropping a “promoter” from the last season were not thoroughly examined, especially considering the withdrawal of India’s leading renewable energy company, Greenko, as one of the major promoters this season.

Lastly, citing Article 299 of the Constitution of India, the memo emphasises that contracts made in the exercise of the executive power of the Union or a State should be made by the President or Governor of the State.

“The question raised is why formal consent from the competent authority was not taken when a major policy decision involving huge financial commitment or conduct of Formula E was taken,” the memo added.

Meanwhile, last month, Kumar was transferred from the MA&UD Department to the Revenue (Disaster Management) Department as the Special Chief Secretary.

Also Read: Return of the double-deckers: 3 e-buses launched before Hyderabad E-Prix

Contract breach amid $84 USD benefit

In a statement, Formula E, which functions under the Fédération Internationale de l’Automobile (FIA), said it reached its decision to cancel the Hyderabad leg of the event after the Telangana government’s MA&UD Department did not agree to fulfil the host city agreement signed on 30 October 2023.

It added that the Hyderabad E-Prix was part of a multi-year agreement (at least four years) between Formula E and the state government.

Jeff Dodds, CEO of the Formula E, had claimed that Hyderabad benefitted made economic gains to the tune of $84 million (over ₹698 crore). Reports suggest that if the government decides to conduct the race sans promoters after Greenko’s exit, it would have to bear the cost between ₹600 to ₹750 crore.

The inaugural E-Prix in the country was held in February last year. However, the political landscape shifted and KTR’s BRS party lost power to the Congress in the recent state Assembly elections.

Meanwhile, the Formula E added that it has been left with no choice other than to formally give notice to MA&UD that it is in breach of contract.

It added that the FEO is now contemplating its next steps, exploring actions it could take against the Telangana government under the host city agreement and applicable laws.

The Formula E officials had met representatives of the new government last month after which it had noted, “With the event just a few weeks away and in its final stages of preparation, Formula E, partners, and suppliers have already made significant commercial investments in the event.”

It’s crucial to note that the Hyderabad round was slated to be India’s only official FIA World Championship event in 2024. The season is set to kick off on the upcoming Saturday, 13 January, with the Mexico City E-Prix.

Also Read: Greenko supplied 4,950 KVA ‘clean energy’ at Hyderabad E-prix