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James Debono
The Indian state government of Kerala will have 16 per cent share, in the new Smartcity project instead of the 9 per cent share which was originally promised to the previous conservative government, an analysis by Business Today reveals. Moreover, the government would have the Chairmanship and 2 Board directors out of 10 in the new company. The chairman shall not however have any casting vote.
According to the agreement the 16% share of the Kerala government will “be subscribed out of the transfer consideration of the Land.”
The government’s share will be increased to 26 per cent after five years but it will have to buy the extra shares.
The agreement was in peril after the Kerala government threatened to issue a global tender for the project. Two rival bids, one Indian and one from Hong Kong were presented to the Kerala state government in the past 3 months.
Under the new agreement, the project would be set up on 246 acres of land which would be given to TECOM on lease for 99 years for Rs 104 crore. (Lm 8 million) During the UDF Government, it was agreed to provide 236 acre of land for Rs 26 crore and the complete authority on the land was to be vested with the company (Lm 2 million).
The rent for the lease land shall be a sheer 1 Rupee per acre per annum, payable annually in advance.
But the agreement sets the cumulative area of the plots converted to freehold at not more than 12% of the total land area at any point of time.
In the event TECOM fails to create either 90000 jobs or develop 6.2 million square feet of building space dedicated specifically for IT services within 10 years, the agreement empowers the Kerala government to terminate the lease and buy out the entire shareholding of TECOM at a price to be determined by an independent valuer.
Ending three years of political wrangle, the Smart City Information Technology park at Kochi has become a reality, with the Kerala government signing the pact with the Dubai Technology and Media Free zone Authority (TECOM), and has given a moral boost to the Left Democratic Front government which is completing one year in office on May 18.
The agreement is also seen as a moral victory for Mr Achuthanandan as he had earlier opposed the terms of the project worked out by the then Congress-led United Democratic Front (UDF) Government. The IT project was also thought to have been shelved after the LDF came to power.
While in opposition, Mr Achuthanandan, had opposed some of the conditions, the previous government allowed in the agreement for setting up the project. He had alleged that it was a real estate project.
After assuming power, the Left government held talks with the DIC and the company officials made many rounds to the state. Opposition leader Mr Chandy criticised the new agreement saying that the United Democratic Front government had assured to create 33,000 direct jobs. But in this agreement, the word ‘direct’ has been removed and just says 99,000 jobs would be created.
Mr Chandy was also critical of the LDF government going for 26 per cent share after five years and said it would not be practical.
‘’The agreement says that the government will have 16 per cent share in the beginning and after five years it would be increased to 26 per cent. But after five years the share value would have increased tremendously and the government will not be in a position to purchase it,’’ he said.
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