A good eight years after it hosted the last investment platform, the Global Investor Meet in 2003, it appears the Kerala government is yet to thrash its investment priorities. Ahead of Emerging Kerala 2012, slated to be the big shout from a state hitherto not known to be hugely investor friendly, what the mandarins have been able to cobble up in terms of investment menu is a kind of mishmash of projects, with stress given to food/agro processing, IT and tourism. Clearly, much political thought seems to have gone into the making of this investment potpourri.
Extreme care has been taken that no big ticket investors, whose very presence would immediately trigger a red alert, figure even in the invitee list. The flip side, of course, is that no such meet can be deemed a success unless a mega investment proposal can be unveiled at the end of the meet. True, the state government has decreed that there will be no goal posts so that no goal can be scored with its decision that no MoU will be signed. As an afterthought, Chief Minister Oommen Chandy has consented to yield to some kind of accountability on Saturday, saying all feasible projects will be given fast-track clearance in 90 days. Come December 15, the state government will have to come out with some kind of stock taking whether Kerala has emerged or not.
For a highly progressive society that holds its own with European countries as far as parameters like Human Development Index, literacy rate and life expectancy are concerned, surely our engagement with investors, especially in the sorely needed infrastructure sector, leaves much to be desired. Kerala has already reached a critical mass in terms of its stature as a global tourist destination. Any quantum jump from this position cannot come by way of mere window-dressing at existing and new tourist destinations. Instead, we need to concentrate on better connectivity, whether it is by way of roads, waterways or air travel.
Again, the Kerala government has made a belated announcement on Saturday that it will take forward the much touted Kerala Airways forward. What remains to be seen is whether this statement is backed by sufficient homework as Emerging Kerala 2012 should be the ideal venue to get some kind of investment tie-up to give wings to air travel, first within the state with its peculiar geographical lay-out and five years on, the licence for the state air carrier to fly abroad.
Meanwhile, for a state whose total length on the coastal side is 590 kms and width that varies from 11 kms to 121 kms, what it sorely needs is a good road network. The cash-strapped government has no option but to look at private infrastructure companies to lay these roads.
Let us look at the fate of the only company that has been emboldened till date to invest in Kerala to upgrade its road network — the consortium of KMC Constructions Pvt Ltd, Hyderabad and Srei Infrastructure Pvt Ltd, Kolkata. This consortium won the tender floated by NHAI and signed the concession agreement in March 2006 for the four-laning and upgrade of 65-km, Mannuthi-Edappilly national highway stretch for `450 crore, that eventually settled at `650 crore. Guruvayur Infrastructure Pvt Ltd, the SPV set up by the consortium, was to complete the project in 30 months and get its revenue stream in place by way of toll over the next 210 months. The project, however, could be completed only by December 2011, largely due to delay from the state government in acquiring land and executing the state support agreement.
The company ran into a number of roadblocks. Political parties joined arms to stop toll collection. The government, instead of enforcing its contractual obligations with firm resolve, decreed that toll collection be stopped. This state of strategic drift lasted for a good two months, till on February 9. The result: the company lost `12.5 crore, half of which the state government will now have to pay from its coffers as per the agreement. Also, the time thus lost will have to be compensated — the period for toll collection will have to be extended from 210 months to 212 months.
The ‘say-no-to-toll’ agitators then opened up a parallel road to bypass the toll booth. The average toll that netted the company around `22-24 lakh a day started a downward spiral, before settling at a low `8 lakh a day. This state of siege lasted a crippling six months, till August. The state government’s abject failure staring them in the face, the company moved the high court. The court directed the Thrissur district collector to close the side road in consultation with NHAI in three weeks. The road was finally closed on August 18.
Curiously the major beneficiaries of this siege were the commercial vehicle owners from other states. The company lost is excess of `25 crore, at around `14 lakh a day as neither NHAI nor the company had worked in any clause to make good the loss thereof. Though under arbitration, the state government may get off the hook, this is not the kind of news that would warm the cockles of potential investors in the state.
Cut to the present: KMC Constructions, Hyderabad, that won the tender to construct the 30-km, four-laning of NH 47 between Vadakkencherry and Mannuthy, is still waiting for the state government to get the possession of the land months after completing the acquisition. The concession agreement was signed in March 2011, but the project is yet to get going. The net loser again would the public as each year lost translates into a higher toll amount.
Having realised the hard way that land acquisition is a major cause for heartburn in Kerala, it is high time that the state government looked beyond wannabe projects like High Speed Rail Corridor that is now pegged in excess of `1 lakh-crore, at widening of the existing road corridors. There is also a need to improve manifold its air and water connectivity, by getting potential investors to sign agreements following this investor meet.
One thing is for sure though. Kerala has to stop freezing in its tracks each time land is allocated to investors. While it is necessary to ensure probity and rule out projects being cornered only for getting access to land, one cannot afford to forget the number of mega projects that has slipped out of the state in the past. All because of a peculiar mind-set on land being allocated for industrial purposes. Also, Kerala needs to bid adieu to hartals at least in industrial areas. Surely, after a long period on inactivity on the mega project front, Kerala deserves a big ticket investment announcement this week — either on the infrastructure front or one that will prop up our hugely depleted, but essential, resource — energy.
Vinod Mathew is Resident Editor, Kerala and is based at Kochi.
E-mail: vinodmathew @newindianexpress.com