Trivandrum: The Comptroller and Auditor General of India (CAG) has come down heavily on the Kerala Government regarding the SmartCity Kochi project being set up by the Dubai based TECOM at Kochi.
CAG has flayed the State Government for their lack of transparency in executing the project. In its report, CAG has said the partner for the project was selected without calling for any expression of interest and without giving opportunities to other players in the field and without considering the past record of the partner. The government suffered huge revenue loss due to failure to monetise market value of land which was transferred on lease to the promoter company. The report further adds that the government has given undue favours at every stage to the SmartCity Kochi project.
According to the report tabled in the Legislative Assembly, there was lack of transparency right from the conceptualisation stage about the justification for a Smart City and the need for creation of a new Special Purpose Vehicle (SPV). The Kerala government had, in January 2008, formed a joint venture company – Smart City (Kochi) Infrastructure Pvt. Ltd. with TECOM Investments FZ LIC Dubai, for setting up the IT park at Kochi and this JV was accorded the status of a SPV.
On leasing out 246 acres of land for 99 years for the SPV at a one time lease premium of Rs.104 crore, the report said it was done without properly assessing the land requirements for the project and also without valuation for fixing lease amount. “Had the transfer value of the land been fixed considering the market value prevailing in the State, the government could have been fetched more revenue. Due to failure to monetise the market value of land, government suffered huge loss of revenue which was beneficial to SPV,” the report said.
Neither the government nor the SPV is able to spell out any precise timeframe within which the project, originally estimated at an investment of Rs.1700 crore, can achieve the objectives. The lessee was granted freehold rights over 12% of the total area of land under their possession at any point of time. The agreement conditions between the government and TECOM in respect of creation of 90,000 jobs were diluted in the agreement.
The report further noted that the conditions in the Framework Agreement for the project were tilted in favour of TECOM. While legal action was possible against the Government for any default in providing infrastructure, it was not possible against the TECOM for any default on their part.
The CAG noted that even after seven years of signing the agreement, the SmartCity’s commitments on constructing 8.8 million sq. ft. of built-up space and creating 90,000 jobs were far from sight.
J Mahalekshmy Menon IA&AS, Principal Accountant General (A&E); N Nagarajan IA&AS, Principal Accountant General (G&SSA) and Dr. Biju Jacob, IA&AS, Accountant General (E&RSA) were present during the media briefing at the AG’s office in Thiruvananthapuram.
Kerala IT News