KOCHI: The cabinet decision to pay compensation to TECOM Investments for withdrawing from the SmartCity Kochi project has triggered a controversy with the Opposition claiming that several clauses in the original agreement allowed the state government to avoid any payment to the Dubai-based firm that owns 84% stake in the project.
Another decision of the state cabinet that has raised eyebrows is the appointment of former SmartCity Kochi MD Baju George in the committee constituted to arrive at a compensation plan for TECOM. “This is inappropriate and raises conflict of interest,” said a source, who worked closely with the government in formulating the initial framework agreement.
Sources said the agreement between TECOM and the state government says there is no need to pay compensation if the firm fails in its promise to generate 90,000 jobs or create 8.8 million sq ft space in 10 years. The project, which was launched on June 9, 2012, could only create just over 5,000 jobs by 2022.
The clause 7.1.3 in the original agreement that is being cited by the Opposition says, if TECOM Investment LLC abandons the project, the state government shall acquire the entire 84% shares of the Dubai Holding subsidiary and its permitted affiliate in the SPV at a consideration, which is the same amount as any sums paid to government of Kerala in cash by SPV till the date of such acquisition.
“It says about the amount that was paid to the government at the start of the project and doesn’t say anything about compensating for the entire 84% stake,” said a source. According to sources, the project had faced many hiccups right from the start.
Satheesan, Chennithala train guns on state govt
“Though the roadblocks were later cleared and the first phase of the project was commissioned in 2016 by the then chief minister Oommen Chandy, the work on the second phase never took off as expected. The second phase was expected to be completed by 2021,” said a source.
SmartCity Kochi is not the only project that has suffered as a result Dubai Holding subsidiaries not fulfilling the original agreement. As per reports, Dubai Holding’s similar SmartCity project in Malta was turned into residential projects while it withdrew from the projects in South Korea and Nigeria.
Highlighting the lag in the development of SmartCity Kochi, Leader of Opposition V D Satheesan accused the state government of being lackadaisical in following up the project. “At the time of the last Oommen Chandy government, a 6.5 lakh sq ft IT tower was commissioned. What was the government doing in the past eight years,” he asked.
He pointed out that the very action of the state government to provide compensation shows that there might have been some lapses on its part. Congress Working Committee member Ramesh Chennithala called the cabinet decision as one of the biggest scams that Kerala has witnessed. Satheesan also accused the government of trying to engage in real estate deals.
Earlier too, allegations regarding real estate deals associated with SmartCity Kochi land had made waves. In 2020, it was alleged that former IT secretary M Sivasankar, who represented the state government on the company’s board, was trying to sell 30 acres of land in the SEZ ‘surreptitiously’.
Chennithala also questioned the appointment of Baju George in the compensation committee. “How can a person who signed the MoU from the TECOM side be on the committee that is going to decide the compensation plans for the Dubai-based firm,” asked Chennithala.
What the pact says
Sources said the agreement between TECOM and the state government says there is no need to pay compensation if the firm fails in its promise to generate 90,000 jobs or create 8.8 million sq ft space in 10 years.
