Will go ahead with Amaravati, lens on Naidu's capital crimes, says Andhra Pradesh Finance Minister
Finance Minister Buggana Rajendranath Reddy in a wide-ranging interview clarified that the Andhra government was looking into irregularities committed during the erstwhile TDP government’s tenure.
State government is looking into irregularities that took place in the name of the capital city and has no intention to relocate the capital. Not just in Amaravati, it has a strong case on the corruption in wind and solar power purchase agreements and Polavaram, says Finance Minister Buggana Rajendranath Reddy in an interview with Kalyan Tholeti
What is the State government's stand on Amaravati? Municipal Administration Minister B Satyanarayana the other day termed it costly and flood-prone, prompting the TDP to question if the capital is going to be relocated.
The minister quoted the Sivaramakrishnan Committee report in view of the recent flooding on the banks of river Krishna. Basically, he was trying to connect today's flooding with the report. The Committee had warned of flooding. It is a well-known fact. In view of the recent floods, he said there will be a discussion. It is just a passing remark. The TDP is intentionally trying to overplay his normal response to a normal question to downplay the various development works the government is taking up. We will go ahead with Amaravati. As of now, what we are looking at are the various irregularities that took place in the capital city construction. Was the erstwhile TDP government interested in building a capital or a city? We were unceremoniously sent out of Hyderabad after division of the State. After the residual AP became a separate entity, we were in need of a capital. Given the economic situation at that time, is it wise on the part of the government to build a city or a capital? Capital is quite different from a city. Their emphasis was on the city. Capital requires administrative buildings and buildings to house employees. The allegations against the then TDP government are insider trading, forcible acquisition of land, zoning to suit their convenience, and taking up infrastructure works at higher than actual value. These are the things we are looking at.
Between June 2, 2014 and Sept-end, 2014 when the capital was announced, they leaked information that the probable location for construction of the capital was Guntur, and then Nuzvid. These leaks came from the government and a number of people from Hyderabad and different parts of AP invested in Guntur and Nuzvid. During that period while the government leaked false information, TDP leaders silently acquired large tracts of land here. All the top TDP leaders acquired lands. These are all going to be proved by way of registrations. Isn't this insider trading? You know the capital is coming here, and so you purchased land. Further, they assigned the work of drafting the master plan to Surbana and Jurong. They gave a plan for capital area consisting of 391 sq km. This was in mid-2015. By early 2016, in six months, the plan was revised to a smaller extent of 217 sq km. You can say that a bigger circle became smaller. In that area (171 sq km surrounding the revised capital area), you have a lot of TDP people owning land. They conveniently reduced the area. Why? The moment you are in the 217 sq km, you have to give land for land pooling and you get 1/4th of the land you own. If you are out of it, you get 100 per cent land and all the facilities associated with the capital not to speak of the increased value. Isn't this wrong? Isn't this insider trading? Isn't this management of policy to suit your convenience?
Next, they threatened people belonging to the weaker sections, who were assigned lands in the form of D pattas, to part with their lands knowing very well that it is wrong to purchase D pattas. These people bought the D pattas after threatening them. Using a minor tweak in the law, they said conveniently that D pattas can be purchased for land pooling. Then came the zoning part. They came up with a grand plan called nine cities in the capital area such as the administrative city, judicial city, tourism city etc. What is left for the rest of the State? Is it wise to build a city or decentralise? What did Sivaramakrishnan say? Development has to be decentralised. You cannot neglect a part or the entire State. Why did they come up with the grand plan? To buy land, indulge in insider trading, and hold onto the land as its market value increases. For example, a relative of the former CM's brother-in-law Balakrishna got 400-odd acres at one lakh per acre at Jaggaiahpet in the CRDA area. What is the value of the land now? Even without being in the CRDA, value of the land was about Rs 20-30 lakhs, and it increased to Rs 50-60 lakhs once it became part of the CRDA. You increase the wealth of your relative by 50-60 times overnight. Isn't this an irregularity? Now let us look at the construction part. Approximately Rs 40,000-odd crore worth of development activities are taking place. Do you know what is the budget allocation for these? Rs 500 crore. If you add the peripheral allocations, it comes to may be Rs 1000 crore. Let us say these projects take two or three years which means Rs 15,000 crore per annum. By then you will have already come up with more. Your original plan was to spend Rs 1.5 lakh crore. That was what you asked the Centre. At one point of time, they asked Rs 6 lakh crore which is 1/4th of the entire country's budget! Now Rs 44,000 crore works are already grounded. You say that the entire thing is going to be borrowed and self-financed. How do you propose to redeem the debt? They are going to impose user charges. It means the entire State is going to pay the debt that has been raised mainly, not to build a capital, but to build a city where your land value is going to go up. I am talking about the TDP city. Initially, when Sivaramakrishnan asked for the State's opinion on the land for the capital, they said 1500 acres was all that was required. Finally, even before formulating a policy to sell, allot or assign land, you already gave more than 1000 acres. To Government of India institutions, land was given at Rs 4 crore per acre but to private institutions, it was given at Rs 20 lakhs per acre. Has anybody heard of such a thing?
Certain mistakes were made. It is the duty of the government to at least mitigate that. We cannot say the former government has made big mistakes, let us also add to those.
As you say, the works are grounded, can you roll them back now?
First, we are identifying overestimated projects. Once they are identified, we will start reverse tendering. Let us say, you have won a contract for Rs 4000 crore. Rs 1,000 crore works may have been done. There is the balance right. Let us at least bring it down to a reasonable level. The size and shape as well as the cost. They wanted to have a ring road that is biggest in the country. They wanted to build a city that is approximately two times the size of New York. The area, if you look, four-five times the size of Mumbai, six times the size of Singapore. At what cost? Is it possible? If you are a Middle Eastern country and you have oil wells, you can afford such things. As it is, your revenue deficits are there, yours is a hand to mouth existence. If you want to build a city that is six times the size of Singapore, and two times the size of London and New York and put this whole debt burden on the common man's head and in the process, try to increase your wealth, because you have bought property there, is it right for the present government to keep quiet?
The State's finances as you said are in a shambles. How do you propose to finance Navaratnalu and is this sustainable? In your budget speech, you didn't mention how the government hopes to augment its revenues? Besides, you increased the estimated grants from the Centre to Rs 60,000-odd crore. Are you sure the Centre will grant that much?
Normally in a State budget, there is not much scope for augmenting resources. Once GST has come into force, the scope has become further limited. We are depending mostly on grants from the Centre. Beyond a certain point, states have to be hand-held by the Centre. The present government in Delhi has more responsibility as they were a part of the State reorganisation. We are hoping that government of India will look more positively towards the state. Last time, since the then government was so deeply entrenched in corruption, the Centre pointed out lapses in Polavaram, and even backward area grants (that paltry amount) was not released for the final two years because there was no proper utilisation. Same is the case with the capital. Our main flagship schemes are Amma Vodi which requires Rs 6,000-odd crore, fee reimbursement scheme which needs Rs 4000-odd crore and, then our farmer's support scheme. We prioritise our flagship programmes. Old programmes can be subsumed or discontinued. We have flexibility. Yes, it is not that easy. We expect this difficult situation for at least three years. That is the reason we want to reduce unnecessary expenditure.
The scope for capital expenditure on creating assets would be limited as well then?
We have to forego certain things if we want certain things.
The cancellation of wind and solar power purchase agreements has landed the State government in hot water. What was the hurry to cancel so many at one go?
There is large-scale corruption and nepotism in wind power. In 2017, even after the period specified by the APERC, they signed the PPAs at Rs 4.84 per unit which is far more than the PPAs being signed elsewhere in the country. They were signed in February 2017. 36 PPAs if I remember correctly. Knowing well that the control period is going to end in March 2017. The firms signed the PPAs with an undertaking that they will complete the plants before March. Is it possible for anybody to complete a wind power plant in 45 days? That means their wind power stations were already ready for commissioning. They established plants without taking the approval of APERC. Mostly three companies are involved in this.
Out of the 41 PPAs signed, 21 were signed after the control period. The others were signed just before. Rs 2500 crore excess amount is the government loss as a result. We are spending anywhere between Rs 5-10-crore per day and Rs 400-500 crore per annum. Knowing well that power cost is coming down, how long can we spend like this? The PPAs were signed even after the installed capacity of renewable energy in AP was far higher than the renewable energy obligation (RPO). This is blatant violation, nepotism and corruption. When there is a graft charge, removing it is one thing. But when there is corruption that is resulting in recurring cost to the exchequer, it is our responsibility to take quick action. This is part of surgical action.
In this process, you have ruffled the feathers of foreign investors. The Japanese Ambassador recently shot off a letter not to go ahead with the review of PPAs. The Centre which has set a renewable energy target for 2022 fears the State government's actions may deter foreign investors.
Any government will represent its country's business interest. It is the duty of the Japanese to represent their business. It is the duty of the AP government to represent the people of Andhra Pradesh. The central government always tries to protect central government interests. But in a federal structure, it is its responsibility and duty to protect our interests too. If you take the RPO, it should be 5 per cent of our energy from 2012 to 2017, 9 or 11 per cent from 2017-2019 and from 2021 onwards, it should be 17 per cent. We reached 23 per cent in 2017 itself -- double of what we are supposed to have. At that point of time, the mandate was 11 per cent.
Why did the high court stay the cancellation of PPAs?
One way to look at it is, right or wrong, there is an agreement. The erstwhile government committed a mistake, but there was an agreement. We called the developers for discussions. You know what their representation was? They did not receive payment for the last one year or more. The last payments were made in May 2018. Our request is in their question. People with whom they entered into an agreement have not paid. It means it is not a viable thing. Even if we continue, we also cannot pay for another year. Even then, do you not become an NPA? Is it not better to sit and negotiate and come to a particular tariff that is reasonable where we can co-exist. Or they can take their power elsewhere in the country. We will facilitate that.
The legislation on 75 per cent quota has also stirred a hornet's nest given that millions in the country migrate to work. Besides, is this practicable and can the government train youth professionally?
Recently, I happened to represent the CM at KIA Seltos roll-out function. They proudly gave a sheet saying that 82 per cent of their employees are locals. The CM also explained the reason behind this law at the recent diplomatic conclave. Manufacturing is about land, buildings and environment. The cost of employment will be lesser when you have locals. We are giving time. We will help with skill development. We are not asking everyone to change overnight. Rules have not been framed yet. Attrition will be least when you have local employees. KIA is an example. This is basically for industry. Services sector is totally different.
On Polavaram, the allegation is that contract with Navayuga was cancelled on a technical matter and there was no evidence of corruption.
Rs 1331 crore was overestimated. Surprising part is in the power house, Rs 787 crore, including provision for GST, was paid to Navayuga without even handing over the site. When such glaring and open irregularities are taking place, do we sit and watch or do we arrest it? For example, in the GNSS package, value of the work was Rs five crore. It was reassigned under 60 c and hiked to Rs 130 crore. Have you seen anywhere Rs 5 crore worth work becoming Rs 130 crore work? Mr Chandrababu Naidu wants us to sit quietly and watch it happen. We feel and CM strongly feels that we are custodians of public money.