Smart City terms and conditions diluted, says CAG report

The terms and conditions with respect to the Smart City project was diluted, which will affect generation of employment opportunities, according to the report of the Comptroller and Auditor General of India.

Published: 09th July 2014 08:10 AM  |   Last Updated: 09th July 2014 08:10 AM   |  A+A-

Smart-City

KOCHI: The terms and conditions with respect to the Smart City project was diluted, which will affect generation of employment opportunities, according to the report of the Comptroller and Auditor General of India.

 “The government may not be able to ensure the much proclaimed employment generation of 90,000 jobs as the terms and conditions as well as liability of Special Purpose Vehicle (SPV) was diluted in the Frame Work Agreement (FWA),” said the report which was tabled in the Assembly on Tuesday.

 In the audit, it was observed that the phases of generation of employment, number of direct and indirect employment and penalty for not achieving the target were not specified in the FWA. In the MoU, it was stated that “Dubai Internet City undertakes that SPV shall together create 33,300 direct jobs in the Smart City in phases.” However, in the FWA, it was said that Tecom shall make ‘best efforts to’ generate at least 90,000 jobs in 10 years. The words ‘make best efforts’ in the FWA absolved the Tecom (SPV) from its obligation to provide employment and slackened their statutory liability. It was also found that no legal opinion was sought before making the modification ‘make best efforts’ to the report said.

 The CAG also found that there was no provision for penalty, security and insurance for ensuring the timely construction of infrastructure/built-up space in the FWA. “Thus, if the developer were to fail to adhere to the time frame, there was no option to levy penalty or recover costs from the Security Deposit and risk of any act or omission of the developer,” the report pointed out.

 Moreover, the selection of Tecom as a partner in the project was not done in a transparent manner and the other players in the field were not given any opportunity. The government had not only handed over the land that was more than required but also at a cost below the market value/ acquisition cost to the promoters.   Pointing out that the project was handed over to Tecom without conducting any feasibility study or other evaluations, the CAG said that the government had held direct negotiation with Dubai Internet City (DIC) at an exhibition which was visited by a team of officials and awarded the ‘Smart City’ project to ‘Tecom Investment’.

 Apart from this, the government had transferred 246 acres of land for establishing the park without properly assessing the land requirement for the project. Unlike the other IT parks, the government granted the lesse freehold rights over 12 per cent of the total area under their possession, the report said.

 Pointing out that the project could have been commenced in 131 acres in 2008, the report said that Smart City delayed the project insisting for SEZ status for the entire 246 acres of land. It also said that the government nominee had only a minor role in the Board of Directors.

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