SEZ to industrial city: Maharashtra govt will ask NMSEZ promoters to pay Rs 2,500 cr
A committee of senior officials led by the state’s chief secretary had been tasked with finalising the modalities of the transfer, including working out a penalty as the promoters failed to meet the deadlines and milestones of the SEZ project.mumbai Updated: Sep 06, 2018 02:13 IST
The promoters of Navi Mumbai Special Economic Zone (NMSEZ) will have to pay a levy of Rs2,500 crore to the state government to migrate to the proposed Integrated Industrial Area (IIA) or an industrial city. The state cabinet in January gave its nod to convert NMSEZ, a project spread across 5,288 acres, into an IIA as per the state’s 2013 policy.
A committee of senior officials led by the state’s chief secretary had been tasked with finalising the modalities of the transfer, including working out a penalty as the promoters failed to meet the deadlines and milestones of the SEZ project located around 35km from Mumbai.
The high-powered committee submitted its report, finalising a levy for the transfer as an additional lease premium for every missed milestone or deadline of the NMSEZ. The recommendations made in the report were recently cleared in the board meeting of the City and Industrial Development Corporation (Cidco). The report has not been made public so far.
Cidco has 26 per cent stake in NMSEZ, while the rest 74 per cent is held by Reliance Industries (RIL) chairman Mukesh Ambani’s personal entities; Jai Corp Limited, promoted by Anand Jain; and Nikhil Gandhi’s SKIL Infrastructure Limited.
Cidco will continue to hold 26 per cent stake in the new IIA.
Despite an attempt to get a response from Anand Jain, he was not available for a comment. A spokesperson of RIL said the company did not have any stake in the project, and it was the personal investment of Mukesh Ambani.
“The committee led by former chief secretary Sumit Mullick and the incumbent DK Jain submitted the report two months back. Since there is no precedent for such a transfer, the committee decided that the levy can be arrived at by looking at the original lease agreement and charging an additional lease premium as per Cidco’s policy for all the missed milestones of the project. That amount works out to be around Rs2500 crore, which will have to be paid to Cidco,” said a senior bureaucrat and a member of the committee, who did not wish to be named.
The bureaucrat said the promoters will be formally asked to pay the levy after the tax- free trade enclave is denotified as a SEZ by the commerce ministry’s Board of Approvals.
The report has also retained the 85:15 development ratio for the IIA as per the original lease agreement, which will see 15 per cent, or 729 acres, reserved for residential purposes and the major chunk – 85 per cent – for industrial purposes.
“The amount has been informally shared with the promoters,” said another bureaucrat and member of the committee, on the condition of anonymity. “The government was clear that this figure cannot be mere negotiation, but should be on the basis of some principle or a formula as it is a big development and will come under public scrutiny. This official, too, confirmed that the committee had arrived at a levy amount of Rs2500 crore.
Cidco had handed over land to NMSEZ in 2006, but the acquisition had started in 2000. However, progress on the SEZ had been slow, and since 2010, the promoters had complained that a change in tax regime and global slowdown had made the project difficult. At least two extensions had been sought by NMSEZ from the Board of Approvals for meeting its pending milestones.
The state’s 2013 IIA policy was drafted to provide SEZs with an exit option if they became unviable owing to change in tax regime or global slowdown. Under the policy, developers are allowed to exploit 40 per cent of the area for residential and commercial use, while 60 per cent has to be kept aside for industry.
However, the cabinet had refused this option to NMSEZ in 2013, as it would have allowed the developers to exploit far more land for residential and commercial use than industry, for which the land had been originally acquired. This government, too, refused to grant this option to the promoters.
First Published: Sep 06, 2018 02:12 IST