AP govt ends tie-up with Singapore consortium, scraps Amaravati project

The Andhra Pradesh government has terminated a commercial area development project in Amaravati, the state’s new capital city in the making. It had been awarded to a consortium of Singaporean companies comprising Ascendas-Singbridge (now part of CapitaLand Group) and Sembcorp Development. The contract was awarded by the previous state government of Chandrababu Naidu. 

The present government, led by the then leader of the Opposition in the Assembly, came to power earlier this year. The termination order was issued on Monday.

In 2017, the AP government and the Singapore consortium had established a multi-layered partnership structure for the development of the Amaravati Capital City Start-Up Area Project in 6.84 sq km (1,691 acres of government land). The consortium had a 58 per cent stake and the state government 42 per cent in the project. The agency incorporated under this public-private partnership was supposed 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. Amaravati is located on the banks of the Krishna river, between Vijayawada and Guntur.

The government of Singapore said the closure was based on mutual consent between the AP government and the consortium. “We note 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,” stated its minister for trade relations, S Iswaran. Soon after coming to power in May, Chief Minister Y S Jagan Mohan Reddy's government put all the Amaravati capital city development activities in cold storage.

And, at a recent Cabinet meeting, he decided to terminate the Start-Up Area project. The state’s municipal administration department issued orders on Monday, authorising the Capital Region Development Authority commissioner to wind up Amaravati Development Partners (ADP) as a voluntary liquidation on a mutual consent basis between the shareholders of ADP, besides initiating steps to terminate the earlier agreement.

Singapore minister Iswaran, who had played an active role in the capital city project on behalf of the Singaporean companies, said companies recognise such risks (of closure or termination of projects) when they venture into any overseas market and factor this into investment decisions. 

Former CM Naidu, who formed the first government of truncated Andhra Pradesh in 2014, had unveiled a grand plan to develop a new capital city, Amaravati, by pooling 33,000 acres of land from farmers in addition to available government land in the area. In 2015, he got Singapore firms to prepare the master plans for the proposed capital city region, capital city and the seed capital area. He decided to hand over the start-up area development project to the Singapore consortium, along with a 58 per cent stake.

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