Ex-Chief Secretary of Indian State files court petition to disqualify tender award to Singapore consortium

by Vincent Low

On 8 Dec 2014, International Enterprise (IE) Singapore representing the Govt of Singapore signed a Memorandum of Understanding with the Infrastructure Corporation of the Indian State of Andhra Pradesh. Under the MOU, Singapore is to develop a master plan for the new state capital of Andhra Pradesh called Amaravati.

Singapore then carried out the master planning in phases, in close consultation with the state government of Andhra Pradesh. Singapore essentially delivered the plans by Jul 2015.

Subsequently in Oct 2015, a Singapore consortium comprising of govt-linked Ascendas-Singbridge Pte Ltd and Sembcorp Development Ltd submitted a Swiss Challenge Proposal to Andhra Pradesh state government to develop a 6.84 sqkm startup area in the new state capital.

A Swiss Challenge is one of the methods by which a Government project can be executed. The prerequisites are that an innovative and unsolicited proposal be presented by a third party to the Government. The Government is then required to make details of the project, including the cost of execution, as submitted by the unsolicited third party, and invite competitors to provide an alternative. If a better proposal (in most cases meaning lower cost) is received by Government, the unsolicited third party will then have a right to match it. Unsolicited third party means the government did not actively seek out to get the party involved in the first place. It approaches the government on its own free will to begin with.

After the Singapore consortium’s proposal was thrown opened to the public and closed in Feb 2017, the Andhra Pradesh state government announced on 15 May 2017 that the Singapore consortium is the winner. The tender award also allows it to form a joint venture company with the Amaravati Development Corporation, a wholly owned entity of the state government of Andhra Pradesh. The new joint venture company, named Amaravati Development Partners, became the main developer of the startup area of Andhra Pradesh’s new state capital.

Former chief secretary of Andhra Pradesh says tender award to Singapore consortium ‘illegal’ and ‘unconstitutional’. 

On Wed (14 Feb 2018), it was reported in Indian media that former chief secretary of Andhra Pradesh, Krishna Rao, had filed a petition in Hyderabad High Court, seeking to declare that the ‘Swiss Challenge’ method adopted by the state government of Andhra Pradesh to award the tender to Singapore consortium is ‘illegal’ and ‘unconstitutional’.

Mr Krishna Rao argued that the basic principles of a ‘Swiss Challenge’ were inapplicable in this case as the original project proponent, which is the Singapore consortium of Ascendas-Singbridge and Sembcorp Development, was unduly favoured by the state government to begin with.

He asserted that the Singapore consortium is linked to the Singapore government.

“Ascendas-Singbridge Group was formed through the merger of Ascendas Pte. Ltd., (Ascendas), JTC subsidiary and Singdridge Holdings Pte. Ltd., (Singdridge), a Temasek subsidiary. Temasek is an Investment Company based in Singapore with a portfolio of SGD 266 billion as of 31st March, 2015, and JTC Corporation is a subsidiary of Ministry of Trade and Industry, Government of Singapore. Temasek and JTC Corporation hold a 51:49 stake in Ascendas-Singbridge Group,” Mr Krishna Rao wrote in his petition.

“Similarly Sembcorp shareholding pattern is Temasek sovereign fund of Singapore holds 49.5% and the rest is held by the public.”

Since the Singapore government signed the MOU with Andhra Pradesh state government in 2014 for the purpose of developing the new state capital, it is already violative of one of the basic tenets of a ‘Swiss Challenge’, which is that it must be unsolicited. The other part of the argument is that the consortium cannot be considered a third party as, the Singapore Government which was privy to the planning of the capital, holds a stake in it.

Mr Krishna Rao urged the court to annul all state government actions that arbitrarily favoured the Singapore consortium and call for fresh bids. The matter is likely to be heard in court next week.

Currently, former Deputy Prime Minister, Wong Kan Seng is the Chairman of Ascendas-Singbridge. It’s not known how he would respond to the accusations coming from the former Chief-Secretary of Andhra Pradesh.