Hyderabad: The state government has to spend around Rs 4,700 crore for the development of AP’s new capital under the Swiss Challenge mode, which was accepted by the Cabinet, but it gets nothing in return.
Officials estimated that the state government would have to spend this amount to develop the start up area (1,691 acres) to create infrastructure facilities, the state Cabinet having already okayed the release of Rs 2,500 crore for this purpose. Thereafter, the commercial and industrial plots will be sold by the Amaravati Development Project, which consi-sts of the Singapore Consortium of companies and the Amaravati Development Company of AP, the profits being shared by the two.
A senior official said the state government would spend the money as neither the CRDA nor the Capital City Development and Management Company (CCDMC) had sufficient funds.
The Singapore Consortium’s conditions in the Swiss Challenge Proposal entail many risks for the state government in its implementation and senior officials have suggested several modifications in it, but it is not clear whether the government has accepted them or not.
The state government has to create infrastructure facilities, such as roads, power and water supply in the start-up area of 1,691 acres wit-hin a prescribed time limit, or else, pay a penalty to the Singapore Consortium.
Another major condition is that if the state government decides to terminate the Singapore Consortium’s contract, it has to pay it 10 times the amount it spent. The Consortium has told the state government that it would spend '1,000 crore: an agreement will be made, enjoining the state to develop the start-up area in three phases over a total period of 20 years as a concession. If the state government wants to terminate the Consorti-um’s services before the concession period of 20 years, it has to pay it Rs 10,000 crore.
Experts have been rightly pointing out that this condition would become a financial burden on the state government.
Once the state government puts up the infrastructure in the start-up area, the Am-aravati Development Part-ner (ADP), consisting of the Singapore joint venture companies and the CCDMC, will sell the plots to third parties at a reserve price. The reserve price consists of the original value of the land and the developmental charges.
The money that the ADP earns by selling plots in the start-up area will be shared by the Singapore companies and the CCDMC at a ratio of 58: 42.
The start-up area will be developed in three phases: 656 acres in the first phase, 514 acres in the second and 684 acres in the third.
In the first phase, the state government (CRDA) has to grant 50 acres to the Singapore companies on a free hold basis, and later, 200 acres.
The state government will have no share in these 250 acres. Thereafter, 600 acres will be allotted at the rate of Rs 4 crore per acre to the Singapore companies.
