‘Won’t invest in Andhra’: Lulu group after Jagan govt cancels land deal
The Reddy government’s decision to renegotiate old power purchase agreements (PPAs) signed by its predecessor has also raised concern among investors and prompted questions over the sanctity of signed contracts in India.Updated: Nov 20, 2019 17:56 IST
Lulu Group International, a United Arab Emirates-based conglomerate, said on Tuesday that it had no intention of making any fresh investments in Andhra Pradesh “given the current scenario” in which the state government has put on hold several key projects undertaken by its predecessor.
The announcement followed a decision by the Andhra Pradesh cabinet led by chief minister Y S Jagan Mohan Reddy on October 30 cancelling an allotment of land made to Lulu Group during the Telugu Desam Party (TDP) regime for developing an international convention centre at Harbour Park on the beach road of Visakhapatnam.
“We agree to the decision of the new government of Andhra Pradesh to revoke the land allotment for this project. Given the current scenario, we have decided not to invest in any new projects in the state of Andhra Pradesh,” Lulu Group’s India director Ananth Ram said in a statement.
The decision by Lulu Group came within a week of a Singapore consortium opting out of the Amaravati capital city start-up area project after the YSR Congress Party government of Jagan Mohan Reddy terminated a contract signed with it by the TDP government, which lost the April assembly elections.
The Reddy government’s decision to renegotiate old power purchase agreements (PPAs) signed by its predecessor has also raised concern among investors and prompted questions over the sanctity of signed contracts in India. Since coming to power in assembly elections, Jagan Mohan Reddy has revisited several projects undertaken by the TDP under former chief minister N Chandrababu Naidu, including the Polavaram multi-purpose irrigation project , and slashed funding to the plan to build a brand new capital city in Amaravati.
Ram said Lulu Group had decided to invest Rs 2,200 crores in Andhra Pradesh to build an International convention centre, a shopping mall and a five-star hotel to provide global exposure to Visakhapatnam as a convention and shopping hub.
“Apart from this, the proposed mix-use project was expected to provide employment to more than 7,000 local youth. We had participated in a very transparent bidding process and were awarded the land on lease for this project,” he said.
The group director said the company had incurred huge expenses towards initial project development costs such as appointing international consultants and architects to design the project.
While asserting that Lulu Group would not invest in any new projects in AP, Ram said the group’s investments in upcoming projects in other states like Uttar Pradesh, Telangana, Tamil Nadu and Kerala would go ahead on schedule.
The previous TDP government led by Naidu signed an agreement with Lulu Group for the Visakhapatnam project during an investors conference held in the city last year.
The foundation stone for the international convention centre was laid by vice president M Venkaiah Naidu in the presence of then Union ministers Suresh Prabhu, P Ashok Gajapati Raju and Lulu Group chairman M Yusuf Ali on February 24, 2018.
But the brakes were applied to the project soon after the YSR Congress Party led by Jagan Mohan Reddy came to power and ordered that construction on all projects taken up during the TDP regime be stopped. On October 30, the cabinet decided to cancel the land allotment made to Lulu Group and take back 13.83 acres handed to the conglomerate.
Information and public relations minister Perni Nani told reporters that the TDP government had made land allotments to Lulu Group in violation of rules. “The land was also given at Rs 4 lakh per acre while the market value is much higher,’’ he said.