SmartCity Kochi: A project mired in controversies since proposal stage
KOCHI: The decision of TECOM Investments, a subsidiary of Dubai Holding LLC, to withdraw from the SmartCity Kochi, announced by the Kerala government after the cabinet meeting on Wednesday, has been brewing for some years.
Industry officials said TECOM’s pull-out from the much-hyped project is a blessing in disguise, considering that the 246-acre IT park was in a limbo as the Dubai promoter could develop only 40 acres. This, at a time when the adjacent Infopark, the Kerala government-owned IT park, was struggling to find more land as its 260-acres had been fully complete and occupied.
SmartCity Kochi, where TECOM owned 84% stake and the state government owned the remaining 16%, was mired in controversies from the conception stage when Oommen Chandy, during his first term in 2004-06, proposed the idea. The V S Achuthanandan-led opposition was a strong critic of the project, pointing out the Dubai firm’s demand for 12% freehold land.
The foundation stone for SmartCity Kochi was laid on November 16, 2007, by then CM Achuthanandan.
“The freehold land of 12% (about 29 acres) was incorporated in the agreement but the Dubai firm had no right to sell the property. So, the word ‘freehold’ in the agreement was an oxymoron,” said an official, who was a consultant to the SmartCity Kochi project in its conception stage.
However, the real trouble for SmartCity Kochi came when the financial crisis in Dubai during 2008-09 forced TECOM and its parent to hold back investments. This meant there was no progress in its project in Kochi.
“The Dubai entity is broke,” Achuthanandan famously said in 2012. “They (Smart City Dubai) don’t have money; they are now trying to come up with numerous excuses,” the then CM told reporters when asked about the delay of the project.
While debt-burdened Dubai, in December 2009, was forced to accept a USD 10-billion bailout from neighbouring Abu Dhabi, it clung on to the Kochi project.
“SmartCity Kochi’s announcement saw land price shooting up in Kakkanad in early 2000. It seems TECOM felt it could make huge profits by selling the freehold land and hence clung to the project,” said the official.
“Those days, one cent of land was valued at mere `2,000, and the announcement of SmartCity Kochi saw prices skyrocketing in the Kakkanad area, a place where no one dared to buy property those days,” he said.
Meanwhile, the government-owned Infopark was quietly established in 2004, and, after initial hiccups, started to attract big companies such as Wipro, Cognizant and TCS.
Ajay Padmanabhan, a Kochi-based consultant and former country head of IL & FS, said the exit of TECOM is what the doctor ordered, given that Infopark is in dire need of more space. “Ideally, the government should acquire the space and develop it,” he said.
Dubai Holding had promised to invest `1,700 crore into the project, but its investment is restricted to just the initial investment of `100 crore.
Musthafa Zafeer O V, an international lawyer and legal consultant with the UAE-based Musthafa and Almana group, told TNIE that the Kerala government should bring in sovereign funds to buy TECOM’s stake. “The original concept of SmartCity – a city within a city – should be retained. The 246 acres should have residential apartments, malls, cinemas and other facilities, as envisaged initially,” he said.
A 20-YEAR TALE
2004-06 Oommen Chandy proposes SmartCity Kochi project in Kakkanad
Nov 16, 2007 CM V S Achuthanandan lays foundation stone
Oct 8, 2011 CM Oommen Chandy launches first phase
Feb 20, 2016 CM Oommen Chandy dedicates the project to nation, after 11 year wait
Aug 21, 2017 National Company Law Tribunal admits insolvency plea against SmartCity Kochi
29 Aug 2017 Baju George removed as MD
Jan 24, 2018 Manoj Nair appointed new MD
Jul 3, 2023 Manoj Nair steps down, and there was no MD for SmartCity Kochi since
Dec 4, 2024 Govt announces TECOM’s exit on mutually agreed terms