NAVEENA GHANATE
The handling of the Formula E Car Race events in Hyderabad has come under scrutiny with glaring procedural lapses and financial irregularities coming to light.
As per documents accessed by ‘The Pioneer,’ the Telangana Government and the Hyderabad Metropolitan Development Authority (HMDA) made substantial payments for the Season 10 race even before signing the hosting agreement.
Compounding the issue, the promoter Ace Nxt Gen Private Limited had already defaulted on payments for Season 9, raising questions about alleged undue favouritism.
Sources indicate that the Congress Government clearly sees an issue with Ace Nxt Gen’s defaulting payments while the government is paying in advance.
The official agreement for hosting Season 10 of the Formula E Race was signed between the Municipal Administration and Urban Development Department (MA&UD) and Formula E Operations (FEO) on October 30, 2023. However, HMDA had already transferred Rs 45 crore (GBP 4,500,000) to FEO in two instalments – on October 5, 2023, and October 11, 2023 – well before the agreement was formalized as per the oral instructions of the then Minister KT Rama Rao.
Payments were made in anticipation of an agreement, bypassing the standard requirement for prior approval from the Finance Department and legal authorization.
Ace Nxt Gen, the original promoter of the Formula E Car Race in Hyderabad, defaulted on its financial obligations for Season 9, despite being contractually bound to pay GBP 9 million (approximately Rs 90 crore) to FEO.
According to internal records, the promoter reportedly failed to pay the second and third instalments for Season 9. For Season 9, Ace Nxt Gen was required to pay 35% of the fee (GBP 3,150,000) by October 13, 2022, and 30% of the fee (GBP 3,000,000) by December 13, 2022.
Despite these obligations, the promoter allegedly failed to pay the second and third instalments for Season 9.
Formula E Operations (FEO) issued multiple reminders to Ace Nxt Gen to clear the outstanding dues and provide enforceable bank guarantees, parent company undertakings, and written confirmation of required permits.
Notices were sent by FEO to Ace Nxt Gen on November 29, 2022, January 16, 2023, and February 20, 2023, highlighting these defaults. Despite the promoter’s defaults, FEO proceeded with the event on February 11, 2023.
Even after the Season 9 event took place on February 11, 2023, FEO sent another notice on May 30, 2023, requesting post-event reconciliation and settlement of accounts. Eventually, on October 27, 2023, the FEO terminated the agreement due to the promoter’s persistent non-compliance. Eventually, the hosting agreement with Ace Nxt Gen was terminated on October 27, 2023, citing repeated non-compliance. This means that even when the tripartite agreement was in force, the government made payments.
The second instalment of Rs 22.5 crore for Season 10 was paid on October 11, 2023, when the Model Code of Conduct (MCC) for the Assembly elections was in force. This payment was made without obtaining approval from the Election Commission of India (ECI), a clear violation of election guidelines.
After Ace Nxt Gen’s termination, the Telangana Government stepped in to assume dual roles as both promoter and host for Season 10. The HMDA, acting on government instructions, not only facilitated payments but also took on the operational and financial responsibilities earlier assigned to Ace Nxt Gen.
However, this move raises concerns. Despite Ace Nxt Gen’s clear payment defaults and eventual exit, the government did not initiate punitive measures against the promoter. Instead, HMDA absorbed the liabilities, fuelling speculation of favouritism.
“Ace Nxt Gen failed to pay the second and third instalments for Season 9, but the FEO still conducted the event in February 2023. Despite the promoter’s financial defaults, neither the HMDA nor the Telangana Government took immediate action to address them, indicating leniency towards Ace Nxt Gen,” sources said.
With Rs 54.88 crore already spent by HMDA, including payments made during the MCC and without proper administrative sanctions, the Formula E saga has exposed serious governance failures.
“The government prioritized a promoter with a history of defaults and ignored procedural norms. The public deserves answers,” sources said.
