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AP Govt Terminates Agreement For Amaravati Start-Up Area Development Project

AP Govt Terminates Agreement For Amaravati Start-Up Area Development Project

AP Govt Terminates Agreement For Amaravati Start-Up Area Development Project
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The Andhra Pradesh government has scrapped the Start-Up Area Development Project in Amaravati, which was supposed to generate 2.5 lakh jobs in the next few years. The state government has also terminated the agreement with a Singapore consortium.  

The project which envisaged development of the start-up area in the state's capital city remained a non-starter in the last 30 months since the previous government signed a memorandum of understanding with the Singapore consortium of Ascendas-Singbridge and Sembcorp Development, raising doubts over its prospects, particularly with a change of guard in the state.

The Amaravati Start-Up Area Development Project was the first major real-estate venture that the previous government had undertaken under the Public Private Partnership mode. The land allotted for the purpose was stuck in an ecological-legal tangle as 170 out of 1,691 acres was right on the river bed.

The consortium was to partner with a state government entity, Amaravati Development Corporation, through a special purpose vehicle Amaravati Development Partner (ADP) and was investing Rs 306 crores as its equity in the SPV.

The ADP was to spend Rs 2,118 crores, for the creation of basic infrastructure like roads, water supply, drainage and electricity and subsequently transfer the infrastructure to the Capital Region Development Authority.

All About Govt’s Housing Project And Land Pooling In Amaravati

About two decades ago, when Andhra Pradesh Chief Minister Chandrababu Naidu thought of shaping Hyderabad along the lines of an information technology (IT) major, many considered it to be a utopia. Infrastructure majors such as Larsen & Toubro and Shapoorji Pallonji have started undertaking work at Velagapudi to turn Amaravati into a world-class city amid criticisms from the National Green Tribunal.

New developments

An estimated Rs 58,000 crore will be required for the construction and development of Amaravati. While Hyderabad will remain the common capital for 10 years, core departments have moved to the new capital and have already started work from temporary or rented buildings. The latest to move in the capital was the Andhra Pradesh High Court that commenced work from the designated Justice City in Nelapadu. 

Apart from the districts of Guntur and Krishna, Mangalgiri is also a beneficiary that has seen many developments.

World Bank withdraws support

However, not all is smooth. As per reports, The World Bank has dropped its plan of developing Amaravati at a cost of USD 300 million. The decision to withdraw comes months after farmers’ complaints that any development may affect their livelihood and even the environment. The project - the Amaravati Sustainable Infrastructure and Institutional Development Project - was to be developed at a cost of USD 715 million and the World Bank had initially agreed to extend a loan of USD 300 million. 

Housing

In October last year, Chief Minister Chandrababu Naidu released the brochure and logo of Amaravati Happy Nest, the first government-sponsored housing project in the city. Located in Nelapadu, the project spans 14.46 acre and will have as many as 1,200 flats for sale. Up for grabs will be 2BHK and 3BHK flats spread across 18 towers, each 12-floor high. The units at the project are priced at Rs 3,492 per sq ft. 

As of March 2019, Happy Nest seems to have finally taken shape with the bhoomi pujan that was held a few days back. The project is scheduled to be completed within two years by Shapoorji Pallonji while the APCRDA Commissioner has assured that there would be no compromise with the quality of this construction.

Infrastructure so far

In terms of road infrastructure, the officials of the CRDA have informed the Chief Minister that the Seed Access Road, a 21-km stretch road network that will connect Amaravati to Vijayawada is nearing completion. This roadway is also the main entry point into Amaravati as well as 20 other priority roads. The last seven-km stretch remains to be completed, the delay was owing to land acquisition issues. Previously terrain issues and other technical issues were also cited.

As of now, infra works such as water supply, sewerage, roadways costing about Rs 14,360 crore is underway and so is the construction of the tallest Secretariat, the High Court and the Head of Departments Complex.

Recap

The CRDA had also planned to create ring-fenced entities (RFEs) for the execution of "remunerative projects" like water and power supply, transport and a host of others in Amaravati.

For example, Amaravati Development Fund (proposed), is one of the RFEs will be responsible for raising the required finances for the (capital) city development. Similarly, Amaravati Building Construction Company Limited will be responsible for construction and maintenance of government campus, including Secretariat, Legislature, High Court. Amaravati Utilities Company Limited to build and maintain water supply, wastewater, stormwater, power and gas systems, Amaravati Blue-Green Infrastructure Company Limited to build and maintain flood mitigation infrastructure and also city canals, Amaravati Growth Corridor Company Limited to build and maintain ring roads and growth corridors in the capital region and the like. 

Why Amaravati stands to gain

Amaravati has some inherent benefits when looked at from an investment perspective. One, its historical importance which maps to the Satavahana kingdom. Second, the region boasts ample water supply. Also, its location in between Vijayawada and Guntur makes it viable as an investment ground. Till recently, Amaravati was touted only as a tourism hotspot. Now, Vijayawada's popularity as an entrepreneurial hub and because of its connectivity could do Amaravati some good. Even Guntur with its various educational institutes, business centres and commercial zones could help scatter housing demand in Amaravati as the two areas are about an hour apart.

Last year, work on building residential quarters for government officials was already underway. Construction of a little over 9,000 flats had already been sanctioned and approved. Developed by the Amravati Development Corporation, these will be up for purchase and would be allotted to officials as per their ranks in the administration.

For a city that is almost six times bigger than Chennai, Amravati has the benefit of being a planned city in the league of Gandhinagar, Chandigarh, Bhubaneshwar and Naya Raipur. Jurong International Holdings Pte Ltd and Surbana International Consultants Pte. Ltd of Singapore had already drawn three masterplans for the city. The larger city is expected to be home to 13.5 million people by 2050 as per the masterplan.

Chinese and Japanese firms, too, turned to Amravati to help build a sustainable city. Besides, Tokyo based Maki and Associates would serve as the master architect.

At the same time, there would be a need for equally strong social and physical infrastructure. Private players, too, would contribute to give shape to Amaravati. Meanwhile, proposals are afloat for developing urban solutions, core capital areas, sewer networks, water supply etc.  

On the whole, if notable private players join hands in building Amaravati, there are chances that big key corporates are roped in to invest in the city.

Where should you invest?

With speculation around which city will become the capital, prices did soar. As of now, the state administrative machinery, as well as government officials, are moving the base. It makes sense to invest closer to Amaravati as further development is only going to add up to the costs. However, beware of artificial price rise in the name of future development. Also, bank on clear title land when going in for plotted development.

Last Updated: Thu Oct 31 2019

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