Kerala government, opposition spar over Smart City Kochi project

THIRUVANANTHAPURAM: The Kerala assembly on Tuesday witnessed uproarious scenes over the proposed Rs.1,500 crore Smart City Kochi project, the work on which has been stalled amid differences between the builder and the government.

The Congress-led opposition criticised the government for its "poor" handling of the project, saying it had reached a stage which can be summed up as "operation success, but patient dead".

It all started when Congress legislator K. Babu, who represents the area where the proposed IT park is to come up, sought leave for an adjournment motion to discuss this issue in the wake of Monday's board of directors meeting of Smart City Kochi that failed to resolve any of the issues that have stalled building of the IT park.

Chief Minister V.S. Achuthanandan admitted that relations with the builder, Smart City Dubai, have gone from bad to worse.

"We have given them a letter saying that they have failed to deliver, despite giving us high hopes. After the foundation stone was laid two years back, nothing has moved and since then relations with them have worsened. We have told them to decide either way because we will look for alternatives if they have any issues," Achuthanandan said.

The government has opposed the demand of Smart City Dubai for 12 percent freehold rights over the project. In 2007, the builder signed an agreement to build the project and Achuthanandan had laid the foundation stone. But since then, nothing has moved despite several rounds of talks between the two sides.

He also added that the central government should declare the 246-acre plot of land where this project is to come up as a special economic zone (SEZ).

"The Centre said that since there is a river flowing by the side of this plot, the entire area cannot be given SEZ status, but in Andhra Pradesh, the centre has overlooked issues like a river flowing. Here, also the centre is discriminating because we are a Left government. This could also be one issue why Smart City Dubai is reluctant in going ahead," Achuthanandan claimed.

Incidentally, the project was first mooted when the current Leader of Opposition Oommen Chandy was the Chief Minister in 2005. Achuthanandan, who was then the leader of opposition, had criticised the Chandy government for handing this project to Smart City Dubai, saying the builder had no experience in IT and was instead a real-estate dealer.

"You ridiculed us and the agreement that we made and today you have fallen into the hole that you dug. This present agreement made by you has been made without the concurrence of the cabinet and since your party (Communist Party of India-Marxist) was adamant that foreign companies should not be given freehold rights, this project has fallen flat," said Chandy.

"See, they are financially broke and that is why they are demanding 12 per cent freehold rights because they can sell that much land to anyone and use the sale proceeds to begin the construction of the project," Achuthanandan said.

State Fisheries Minister and chairman of Smart City Kochi S. Sarma said there is no question of allowing them to sell an inch of the land and this stand is totally opposite to the agreement inked by Chandy, which allowed them to sell the freehold property.

The assembly witnessed close to an hour-long heated exchange after which Chandy led the entire opposition in walking out of the house following denial of the adjournment motion.

UDF walkout over 'SmartCity' stalemate

Peeved over rejection of its demand for an adjournment motion to discuss the delay in implementing the multi-crore 'SmartCity' IT project in Kochi, the opposition UDF today walked out of Kerala Assembly.

The CM finally admitted that relations with Dubai-based SmartCity Dubai, joint venture partner with the state government, has strained due to dispute over the question of freehold on 12 per cent of land with right for sale, Kerala Chief Minister V S Achuthanandan said the government had to think of an alternative to complete the project.

The GoK was adamant on the stand that the demand of SmartCity Dubai for freehold on 28 of the 256 acres land given to them with right for sale was not acceptable to the state> This is completely redicules as there is nothing called freeholold without selling rights in the framework agreement as free hold as such is a very clear word.

however lowering down his tone he said that the government had not taken a decision to sever ties with Tecom.

The crucial 20th BoD meeting of Smartcity @ Kochi today.

Coming to Kerala thinking its an investment destination can become irrevocable nightmare for foreign direct Investors. The crucial 20th BoD meeting of Smartcity @ Kochi today. The go slow attitude of the GoK has put the project on tenterhooks and todays meeting is very crucial for the way forward.
Meeting @ 4 at the Ramada Resort, Kochi.

SmartCity Kochi clarifies its stand through a Q&A

Q&A
March 25, 2010

1. Is the latest letter considered a letter of notification to your establishment?
Whether it’s a letter or notification, what baffles us is considering the size, stature and importance of the project to the state -does it take more than 2 years to take a decision?


2. It's believed that Kerala government has given ultimatum to Tecom saying they should start the construction immediately. Is that true?
The Framework Agreement is very clear on how to start the construction and the roles and responsibilities of both the parties concerned, so unless otherwise the required conditions are met ultimatums cannot be issued to us.


3. Is Tecom still insisting on additional conditions like the freehold status? Why are you adding this condition now?
Freehold is a contractual obligation, not a favour done to us. Moreover the freehold is asked for SmartCity Kochi, an Indian company registered under the Indian companies act. We are not asking for anything which is not in the Framework Agreement. The Framework Agreement is available in the website of Kerala IT mission for anyone to verify the facts.


4. How soon will you be able to start construction work?
As mentioned earlier in question no 2 the Framework agreement clearly defines about how and when to start the work. We are quite optimistic that we will be able to complete this project as planned. We have fulfilled all the time bound contractual obligations mentioned in the Framework Agreement. We are not only prepared to develop the project on time but also to face any other contingencies arising due to any unlikely scenario.

5. Are there still issues pending?
Yes, there are issues pending related to the land, SEZ status, registration and stamp duty exemption.

6. What stage is the discussion on?
We are only discussing on the compliance of the agreement as we have nothing else to discuss or demand for.

7. How can the issues be resolved?
There are no issues pending from our side. Since the issues pending are from the Government of Kerala we expect them to get resolved once they act positively.

8. Do you feel any political angle is involved in the whole thing?
We are here in Kerala with a business proposition which we believe that will immensely benefit the people of Kerala and will help position Kerala and Kochi as a preferred IT investment destination.

9. Has global and regional recession lead to any cash crunch with your establishment that is leading to delays in the SmartCity Kochi?
To set the record straight, we would like to clarify again that these are baseless and mindless allegations which lack clarity, information and truth. Dubai has turned out to be a financial powerhouse in the recent decades because of its vision and planning and a lot of companies here have attained globally formidable stature in this process. It is completely irrational and unreasonable to link different entities and draw conclusions. Moreover people who made these baseless allegations never even bothered to check with us once.

10. What is the status of Tecom projects elsewhere abroad, like the Malta Smart City?
Malta project is right on course and actually we are ahead of 1 year and 3 months in the phase I which will go operational by the 3rd quarter of this year.