Singapore model gets Andhra Pradesh government nod to develop Amaravati

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Government sets aside objections raised by officials on the consortium proposals.

Hyderabad: Setting aside major objections raised by senior IAS officers, particularly from the finance department, the state government is going ahead with accepting the Singapore Consortium proposals on Swiss Challenge mode for development of start-ups of seed capital area of Amaravati.

The main objections raised by officials were concessions and incentives, termination fee as well as revenue sharing besides other issues.

The state government has accepted the concession agreement to be between Amaravati development partners (ADP) and CRDA instead of state government as proposed by the officials.

The officials objected to the Singapore Proposal where the bidding promoters in terms of percentage of revenue sharing was not mentioned. To provide external infrastructure within 18 months in case of delay in providing external infrastructure within the time limit, the state government had to give the payment. Officials also objected to this clause in the Singapore consortium proposal.

The officials proposed that the total value of concessions, incentives should not exceed 20 per cent of the total project cost on the lines of tourism infrastructure projects excluding the cost of land. But the state government is silent on this proposal.

Main objections raised by the officials:

The termination payments seem to be on the higher side compared to model concession agreement.

The panel interest rate of 20 per cent may be modified and linked with SBI Prime Lending Rate (PLR) with penal Interest rate. Government may have a relook into the termination payments.

APCRDA also should form tender evaluation committee to evaluate  tender documents, select bidder, enter into concession agreement, and state support agreement before handing over the work to contract management team.

Opening of escrow account, entering into substitution agreement should be resolved before calling competing counter proposals.

Singapore Consortium may have one lead partner and a supporting partner instead of 50:50 joint venture , so that the lead partner takes the full responsibility for execution of the project.

Proposals accepted by the government:

Concessional agreement shall be between CRDA and ADP only.  State government only permits CRDA to enter into concessional agreement with ADP.

CRDA also may form tender evaluation committee for tender documents, selection of bidder, entering into concession agreement, and state support agreement before handing over the work to contract management team.

The government said  extending concession of exemption from registration & stamp duties is a policy decision.

Regarding concessions and incentives issue state government is silent.

Key proposals of Singapore Consortium:

Payment of equity and additional equities in the proposal

Infuse equity of 42 per cent through CCDMC

Payment of termination, indemnity, penalty and other amounts to be borne by AP government.

Allocation and release of required budget to agencies concerned within the time frame stipulated in the contracts to complete the external infrastructure works.

To bear with the incidence of capital gains tax on government on signing of unconditional and irrevocable General power of Attorney (GPA)  for the land.

CRDA entering into Joint Development agreement with transfer of 50 acres to ADP at nominal price proposed by ADP for catalytic development.

Either sale of 200 acres of land at reserve price for phase -1 as and when requested by ADP without further revenue share on sale of developed plots or entering into joint development deal with ADP on revenue share model for development of 200 acres land as and when requested by ADP with terms and conditions.

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