Temasek-linked project to build new state capital in India stalled

The media reported on Monday that the joint venture project between Singapore and India to build the new Amaravati capital city for the state of Andhra Pradesh has been stalled by the Indian state government (‘New state government reviewing Amaravati plans‘, 15 Jul).

The project is a joint development between the Singapore Consortium led by Ascendas-Singbridge and Sembcorp Development, and Amaravati Development Corporation Limited, a company owned by the Andhra Pradesh state government.

Ascendas-Singbridge is an entity under CapitaLand which in turn, is majority owned by Temasek. Sembcorp Development is owned by Sembcorp Industries, which is also linked to Temasek. The foundation for the city was laid on 22 October 2015 by both Indian and Singaporean government officials. Singapore was represented by then Minister for Trade and Industry, S. Iswaran.

Singapore Minister Iswaran with previous Andhra Pradesh Chief Minister Naidu in happy times

Change of State Government in Andhra Pradesh

Andhra Pradesh was earlier governed by the Telugu Desam Party (TDP) which was aligned with PM Modi’s Bharatiya Janata Party (BJP). However, in India’s general election two months ago in May, the ruling TDP lost the Andhra Pradesh Legislative Assembly election. The YSR Congress Party led by Y.S. Jaganmohan Reddy swept the elections with a majority of 151 out of 175 Assembly seats, propelling Mr Reddy to become the new Chief Minister of Andhra Pradesh, defeating Mr Naidu of TDP.

Unfortunately, Mr Reddy is not a keen supporter of the Amaravati capital city joint venture project and has publicly announced that the project is “not a priority” for him. The new state government is reviewing all ongoing works and cutting finances, triggering uncertainty over the future of the state capital project which Temasek-linked entities Ascendas-Singbridge and Sembcorp Development have invested in.

Work on the capital city, which has been running behind schedule, has come to a standstill. Chief Minister Reddy has set up a team of technical experts to review every aspect of the project, following allegations that the previous Chief Minister was involved in corruption over the way land was acquired, as well as other improprieties including insider trading. People linked to the previous Chief Minister were said to have allegedly bought land with the knowledge of where the capital city was going to be located before any formal announcements were made.

To underscore Mr Reddy’s disdain for the project, it was reported that his new state government has even gone ahead to cancel flight arrangements connecting Amaravati’s Vijaywada Airport and Singapore’s Changi Airport, an agreement signed by the previous state government with Singapore. Not surprisingly, the TDP has labelled the present state government’s move to undermine the capital city project a political vendetta.

But Dr N. Bhaskara Rao of the Centre for Media Studies said, “He (Reddy) can’t deny the fact that Amaravati will continue as state capital. So what he can do is somehow remove the Naidu association. He is trying to dilly-dally and keep everything in suspense. But he hasn’t suspended the idea of Amaravati.”

Meanwhile, there is little Singapore can do except to entertain those technical experts sent in by the new state government to review the project. It’s not known what Minister Iswaran would do next to get Singapore out of this political mess brewing in Andhra Pradesh.