Back Smarting no more?
K.G. Kumar
| Whether the reported revival of the Smart City project in Kochi will spell wonders for the industrial rejuvenation of Kerala is something that remains to be seen. |
It still remains shrouded in a great deal of uncertainty and doubt, but the proposed, controversy-laden, Rs 1,500-crore Smart City information technology (IT) project at Kakkanad in Kochi seems to have got a new lease of life. For a project that has been hanging fire for nearly two years now, even a glimmer of hope is like a burst of rainfall in the desert of Kerala's industrial landscape.
Thus it was with more than cursory interest that Kerala watchers received the reports in the media last week that suggested that the Left Democratic Front (LDF) Government has been able to convince the Dubai-based partner of the project to agree to the government's terms and conditions.
The revised terms, if reports are to be believed, offer Kerala a far better deal in terms of return on investment and generation of employment than what the previous United Democratic Front (UDF) Government would have got in its negotiations with the Dubai Internet City (DIC) and the Dubai Technology and Media Free Zone Authority (TECOM), the Dubai-based conglomerate.
PAST AGREEMENT
According to the `Framework Agreement' drafted by the UDF, the government's shareholding in the Special Purpose Vehicle (SPV) formed for the project - Smart City (Kochi) Infrastructure Pvt Ltd, a company registered under the Companies Act, 1956 - would have been limited to 9 per cent, to be subscribed out of the transfer consideration of the assets. Also, a casting vote would have been denied to the Chairman of the Board of Directors of the SPV, who shall be a government nominee not below the rank of a Secretary to the Government of Kerala.
In the original plan of the UDF, an investment of Rs 1,500 crore in the first phase was designed to generate 33,300 direct jobs over a period of 15 years.
The UDF Government aimed to hand over 62.27 hectares of the Government-owned Infopark at Kakkanad, along with the buildings inside the area, to the DIC for a consideration of Rs 109 crore. The equity component of the Government in the project was supposed to have been raised from this amount.
The then UDF Government also planned to acquire another136 hectares of land, which it planned to sell to DIC for Rs 36 crore. Additionally, another 100 hectares were marked to be handed over to DIC free of charge, apparently in accordance with the UDF Government's IT policy, which promised 30 cents of free land to companies for every 100 jobs generated.
But these conditions now seem to have been thrown to the winds.
If the recent reports are true, Infopark will remain with the Kerala Government, and TECOM will not be guaranteed any monopoly on IT infrastructure projects in and around Kochi. Nor will it be given any freehold land for a pittance.
On the jobs front too, the new deal appears to be loaded in favour of Kerala. Against the old promise of 33,000 jobs in 15 years, the fresh commitment is 90,000 jobs in 10 years. Further, TECOM will set apart 70 per cent of the allotted land exclusively for IT infrastructure.
Even as the LDF and its sympathisers are rubbing their hands with glee at the prospects of an astounding turnaround in Kerala's industrial future, it is far too early to pop the champagne corks.
Given the propensity of the rival UDF and LDF political formations to make capital of ritualistic victories, the Kochi Smart City project may well go the way of most symbols - as a mere commemoration mark in the diaries of Kerala's political parties.
Smart City may be smarting a little less now, like a wound that has had over a year to heal. But whether it will prove to be the single most important project for the industrial rejuvenation of Kerala, is another matter altogether.
The writer can be contacted at kgkumar@gmail.com
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