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Andhra’s start-up controversy

The Andhra Pradesh Cabinet Tuesday approved proposals submitted by the Singapore consortium, comprising Ascendas-Singbridge and Sembcorp, for the development of the start-up area in the Amaravati capi

Published: 04th May 2017 04:00 AM  |   Last Updated: 03rd May 2017 11:08 PM   |  A+A-

The Andhra Pradesh Cabinet Tuesday approved proposals submitted by the Singapore consortium, comprising Ascendas-Singbridge and Sembcorp, for the development of the start-up area in the Amaravati capital region under the controversial Swiss Challenge method. The move has raised more questions than answers for several reasons, the most important being the revenue sharing agreement and the way the government has gone about clearing legal hurdles to award the contract to the consortium.

As per the approved proposals, the start up area will be developed jointly by the consortium and the government's Amaravati Development Corporation. The government would end up investing over `3,000 crore if one takes into consideration the expenditure on providing infrastructure, while the consortium would be pumping in a meagre `306 crore. However, the profits would be shared in the ratio of 58:42 with the Singapore firms walking off with the larger piece of the cake.

Earlier, the Hyderabad High Court had stayed the Swiss Challenge method following a complaint that this revenue sharing model was kept a secret. The court also found fault with the process as the original project proponent (Singapore Consortium) bypassed the AP infrastructure development authority and dealt with the government directly. Against this backdrop, the government withdrew its earlier notification, amended the Andhra Pradesh Infrastructure Development Enabling Act and picked the consortium for the project.

The Opposition argues that the government has compromised the spirit of the Swiss Challenge method by leaving no scope for any other bidder and rendering the infrastructure development authority useless. The revenue sharing model too smacks of favouritism, it alleges. The onus is on the government to come clean and explain how this setup will benefit the state. Transparency in the historic project is a must and nothing less than the credibility of the government is at stake.



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