SINGAPORE - When the Chief Minister of India's Andhra Pradesh lost power in May this year, it threw out of kilter a joint project between Singapore and Andhra Pradesh to develop the state's new capital called Amaravati.
With the new government disparaging the project, Singapore companies involved in it are evaluating the impact of its decision on the investment opportunity, said Minister-in-charge of trade relations S. Iswaran in Parliament on Tuesday (Sept 3).
He assured the House no state funds had been used for the project.
"In terms of whether there were any subsidies or grants by the Government for investments in the state, the answer is no," he added.
Mr Iswaran was replying to Workers' Party Non-Constituency MP Leon Perera, on whether state funds had been used and the total investment made by Singapore companies.
As for their total investments, the minister said the companies' commercial discussions were confidential and he was not privy to the details.
Recounting the project's origins, he told the House that the Andhra Pradesh government sought Singapore's help in 2014 to plan the new capital. It was the brainchild of its then Chief Minister N. Chandrababu Naidu.
Subsequently, a consortium with Ascendas-Singbridge company, now part of CapitaLand Group, and Sembcorp Development was awarded a joint venture opportunity to develop the city.
After Mr Naidu's election defeat by Mr Jaganmohan Reddy's YSR Congress party, the World Bank withdrew US$300 million (S$417 million) in funding for the project, after the central government stopped supporting it.
On Tuesday, Ms Laurel Ostfield, the spokesman for Asian Infrastructure Investment Bank (AIIB), told The Straits Times that "AIIB is no longer considering the Amaravati Sustainable Infrastructure and Institutional Development Project for funding", reiterating its July announcement.
The two banks were due to be major lenders to the US$715 million project.
Mr Reddy, in criticising the project, claimed the land rates were fixed under the previous administration.
Other reports claim he is trying to erase the political legacy of his electoral rival.
Son of former chief minister and influential Congress politician Y.S. Rajasekhara Reddy, the younger Reddy's party won 151 out of the 175 seats in the state assembly.
His government has also cancelled the twice-weekly flights connecting Amaravati's Vijaywada Airport and Singapore's Changi Airport, citing costs, according to Indian media.
The flights started last December.