BANGALORE - The state government of Andhra Pradesh in southern India has issued an order cancelling its agreement with Singapore developers to build the capital city Amaravati.
The order issued on Monday (Nov 11) said the government would "refrain from proceeding further in the start-up area development project of 6.84 sq km".
This would effectively "wind up Amaravati Development Partners Pvt Ltd by voluntary liquidation on a mutual consent basis" between the shareholders.
The order was issued after a Cabinet meeting on Oct 30 under the chairmanship of state leader Jagan Mohan Reddy discussed the capital.
In a press statement after the meeting, the state's Information and Public Relations Minister, Mr Perni Venkata Ramaiah, said the government had decided to "terminate the agreement with the Singapore consortium".
The government order, signed by the Secretary of the Municipal Administration and Urban Development Department, now makes the decision official.
It authorises the Commissioner of the Capital Region Development Authority (CRDA), which oversees the development plans for Amaravati, to draft a termination agreement with the Singapore consortium - Singapore Amaravati Investment Holdings (SAIH).
Singapore had been involved in the Amaravati project since 2014, when Andhra Pradesh lost its capital city Hyderabad to the newly created state of Telangana. A whole new city was planned on the banks of the river Krishna, on 684 hectares of village and farmland.
In 2017, the consortium was announced as the master developers for the waterfront financial centre in Amaravati. The city was conceived to be 10 times the size of Singapore.
Amaravati was the pet project of the state's former chief minister, Mr Chandrababu Naidu, who had promised to model the city after Singapore and inked two memorandums of understanding with the consortium backed by Singapore.
Telugu Desam Party leader Mr Naidu had also devised a unique method of acquiring land from locals, called the land-pooling system. It offered farmers a developed plot in the future city as payment for their land.
However, Mr Naidu lost the state elections in May to his rival Mr Reddy, from the YSR Congress party, which has long been critical of the capital project.
As the state's leader, Mr Reddy set up a committee to review the capital project. The committee was given six weeks to evaluate everything from the land-pooling system to the tenders issued for road-building and housing.
The report was due this week, but CRDA chairman Lakshmi Narasimham said it could take longer, and expects a preliminary report soon.
State officials told ST under the condition of anonymity that the city was already behind schedule under the previous government.
This was largely due to changes to masterplans over ecological concerns and as a result of the World Bank's withdrawal in 2018 of a promised loan of US$300 million ($408 million) following farmers' complaints about police intimidation.
The Chief Minister had long stayed silent about the future of the project, but there were indications he was disinterested.
His state budget this year allotted only 10 billion rupees ($190 million) to the capital. The proposed Amaravati Sustainable Infrastructure and Institutional Development Project needed an investment of US$715 million.
In the days before the official announcement, a few leaders, including the Minister for Municipal Administration Botsa Satyanarayana issued press statements alleging irregularities in land allotments and said they had no objection if the city project was cancelled.