The Hindu Business Line : AP Govt still hopeful of Volkswagen project

THE Andhra Pradesh Government is still optimistic of attracting Volkswagen to set up manufacturing unit at Visakhapatnam despite coming under cloud for its suspicious role in transferring Rs 11 crore in advance to a nominee company - Vasishta Wahan, which was reportedly disowned by the German automobile major.

Addressing newspersons here on Tuesday, the State Industries Minister, Mr Botsa Satyanarayana, flanked by the State Advisor, Mr D.A. Somayajulu, admitted that the Government had agreed to pay 5 million euros as its equity contribution in the proposed joint venture with Volkswagen.

Accordingly, the State Government had already paid 2 million euros as advance in favour of Vasishta Wahan, which was nominated by the Volkswagen's India representative, Mr Helmut Schuster.

Denying the charges of wrongdoings in the deal, the Minister said there was absolutely no need to worry about the money paid to Vasishta Wahan. As per the agreement entered into with Mr Helmut Schuster, Volkswagen would have to return the money paid by the AP Government in case the car major decides against setting up the facility in the State.

A high-level committee of State Government, which met here on Tuesday morning to take stock of the developments, has also decided to send a delegation to the Volkswagen headquarters to discuss the issue with its top brass and chalk out the future course of action, the Minister said.

In a separate press conference, the Chief Minister, Dr Y.S. Rajasekhara Reddy, said the Government had obtained the necessary expert advice from a well-known consultancy firm while paying the advance amount to Vasishta Wahan.

The Volkswagen India representative, Mr Helmut Schuster, had advised the AP Government to make payment to the nominated entity, terming it as the Indian arm of German car major.

According to Mr Somayajulu, the Government had also obtained the legal opinion on payment of advance amount of 2 million euros. Stating that everything was done in a legal and transparent manner, he said the Government had also obtained the approval of the German Embassy before making the payment.

Further, the AP Government has been in constant touch with the Volkswagen top management ever since Mr Helmut Schuster stepped down following charges of fraud and bribery. The Government did not receive any communication from Volkswagen so far disowning Vasishta Wahan, the Minister said.

According to the Minister, the Government expects Volkswagen to appoint its India representative in the place Mr Helmut Schuster soon to fulfil the obligations under the agreement signed with the State Government for setting up of Vizag plant.

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