Singapore Consortium closes Amaravati project

Dealing with another huge blow to the development of the new Andhra Pradesh capital 'Amaravati', a consortium of Singapore companies announced on Tuesday that it has closed Amaravati Capital City Startup Project.

Amaravati: A consortium of Singapore companies announced on Tuesday that it has closed Amaravati Capital City Startup Project, dealing with another huge blow to the development of the new Andhra Pradesh capital.

The consortium made the announcement a day after the Y.S. Jagan Mohan Reddy-led government announced the termination of the project, which was aimed at developing a 6.84 square kilometre startup area in the Greenfield city coming up on the banks of Krishna river.

Andhra Pradesh's Municipal and Urban Development Minister, Botsa Satyanarayana on Tuesday said the project was called off with mutual consent after there was no satisfactory answer to the concerns they raised.

"We had asked the Singapore Consortium (comprising Ascendas Singbridge Pte Ltd and Sembcorp Development Ltd) about the benefits the state would get out of the project and about the delay in the project," he said.

His statement came hours after Singapore's Minister-in-charge of Trade Relations S. Iswaran stated 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.

"Therefore, our joint development company Amaravati Development Partners (ADP) and the state government of Andhra Pradesh have mutually agreed to terminate the project," he said in a statement.

Iswaran, who had played an active role in the capital city project, said the companies recognise such risks when venturing into any overseas market and factor them into their investment decisions.

According to him, the Singapore consortium companies have stated that the project has cost them a few million dollars and that its closure does not impact their investment plans in India.

Singapore Amaravati Investment Holdings (SAIH) also announced the termination of the project. "Following the change in the scenario for the development of Amaravati Capital City, it is no longer feasible to develop the Amaravati Capital City Start-up Area as originally planned," Singapore media quoted SAIH as saying.

The Singapore Consortium is the third major entity to pull out of the development of Amaravati since the new government was formed in the state in May.

In July, the World Bank and the Asian Infrastructure Investment Bank (AIIB) pulled off a project to fund Amaravati's development.

The state government and the Singapore consortium in 2017 had signed the agreement for the development of the Amaravati Capital City Start-Up Area Project in 6.84 square km, with the latter holding a 58 per cent stake and the state government retaining 42 per cent in the project.

ADP incorporated under this public-private partnership was to develop and market the available land in the start-up area for offices and other commercial activities to companies and institutions across the globe.

The agreement with the Singapore Consortium was signed when N. Chandrababu Naidu was the Chief Minister.

Amaravati was the brainchild of Naidu, whose Telugu Desam Party (TDP) lost power to the YSR Congress Party (YSRCP) in the elections held in April.

After the new government led by Jagan Mohan Reddy came to power, the development works in Amaravati had come to a halt as it decided to review all major projects, citing alleged irregularities by the previous government in awarding them.

In July, the World Bank and the Asian Infrastructure Investment Bank (AIIB) had pulled off a project in Amaravati.

The World Bank and AIIB had committed $300 million and $200 million respectively for the Amaravati Sustainable Infrastructure and Institutional Development Project.

The government last month constituted a five-member panel, comprising urban planning experts, to review the Amaravati project. The government said it will decide after receipt of the panel's report whether to go ahead with the development of Amaravati as the state capital or look for another location.