Another setback for dream capital Amaravati, Singapore firm pulls out
In yet another blow to former chief minister Chandrababu Naidu’s dream project Amaravati, the capital city of Andhra Pradesh whose fate is hanging balance at present, the Singapore government on Tuesday declared that it was opting out of capital city start-up area plan. This comes months after World Bank pulled out of the project.
Amaravati as Andhra Pradesh’s capital was Naidu’s brainchild. Jaganmohan Reddy, who replaced him as chief minister in May, has said that the city’s development would not be his priority. He demolished Rs 9-crore conference hall Naidu had built in Amaravati when he took office. Reddy has called the land acquisition for the new capital a scam and cut funds for its development.
“I’m confident that we will build the best capital in India. Tomorrow, all over the world, people will talk about Amaravati,” Naidu had said about the new capital conceived by his government in 2017. The start-up area plan was to be developed through a special purpose vehicle Amaravati Development Partners Private Limited (ADP), which comprised state-owned Amaravati Development Corporation Limited (ADCL) and Singapore Amaravati Investment Holdings (SAIH) Pvt Ltd.
As per the proposal, the ADP was to develop about 1,691 acres of start-up area in three phases. While SAIH owned 58 per cent stake in the ADP, the ADCL has 42 per cent stake. The start-up area is aimed at kickstarting the economic activity in the new capital.
In a statement, Janice Ong, senior assistant director of corporate communications of the Ministry of Trade and Industry of the Singapore government, said the decision to wind up the project followed a government order issued by the YSR Congress party government led by Y S Jagan Mohan Reddy on Monday.
“The Singapore Government notes the decision by the Government of Andhra Pradesh to close the Amaravati Capital City Start-Up Area project via a Government Order dated November 11, 2019,” the statement said.
The closure is based on mutual consent between the GoAP and the Singapore Consortium (comprising Ascendas Singbridge Pte Ltd (now part of CapitaLand Group) and Sembcorp Development Ltd).
Quoting minister-in-charge of trade relations S Iswaran, the statement said the Singapore Consortium was appointed by the Government of Andhra Pradesh in 2017 to help master develop the 6.84 square kilometres of Start-Up Area of its new capital city Amaravati.
“We note that the newly-elected Government of Andhra Pradesh has decided not to proceed with the Start-Up Area given its other priorities for the state. Companies recognise such risks when venturing into any overseas market and factor them into their investment decisions. In this instance, the Singapore Consortium companies have stated that the project has cost them a few million dollars,” Iswaran said.
Stating that the closure of the project does not impact their investment plans in India, Iswaran said Singapore companies remained interested in opportunities in Andhra Pradesh and other Indian states because of the size and potential of the market.
On Monday, the Jagan government issued orders asking the Andhra Pradesh Capital Region Development Authority (APCRDA), the nodal agency of the capital city, not to proceed further on the project. The government authorised APCRDA commissioner P Lakshmi Narasimham to finalise the draft termination agreement with Singapore consortium.
C Ramachandraiah, professor in Centre for Economic and Social Studies (CESS) and an expert in urban projects and smart cities, said though the capital city proposed to be built by Chandrababu Naidu government was a big blunder, it would be a bigger mistake on the part of the Jagan government to relocate the capital.
“Already huge amount of money has been pumped in Amaravati capital region and it will go down the drain if the capital is relocated elsewhere, since it involves big money to start the project all over again. Instead, the present government can continue the administrative capital in the existing buildings and decentralise judiciary and other developmental projects to different regions of the state,” he said.
Earlier, in July, World Bank withdrew its proposal to lend US$ 300 million for Amaravati capital project, as the Jagan government did not respond to the repeated reminders from the bank, lending credence to the reports that the government was not interested in continuing the project.
In September, the Jagan government constituted an expert committee headed by retired IAS officer G N Rao to study various aspects of the capital city and suggest changes in the capital city planning. The committee toured different parts of the state and collected opinions from various sections of people. The deadline for the people to give suggestions on the capital city ended on Tuesday.