The Amaravati capital project was formally scrapped by the new Andhra Pradesh government on Wednesday (30 Oct), terminating the agreement with the Singapore consortium consisting of Temasek-linked companies.
The Singapore consortium had been involved in the Amaravati project since the beginning of 2014. Surbana Jurong submitted the city’s masterplan in 2015, and a consortium of Ascendas-Singbridge (now under CapitaLand) and Sembcorp Development was announced in 2017 as the master developers.
The Amaravati city, designated by the previous Andhra Pradesh government to be its new state capital, was conceived to be 10 times the size of Singapore, requiring billions of dollars of investments. It was supposed to be developed in three phases over 15 years.
According to an Indian news media, the Temasek-linked companies soon faced problems when the project was started. Some of the allotted land was stuck in an ecological-legal tangle as 170 out of 1,691 acres was right on the river bed. Since no development activity was permitted in that portion of land, as per River Conservation Act and also the National Green Tribunal orders, the Singapore consortium tried to seek alternative land. That meant changing the core capital Master Plan, which ran into complications with several central government agencies.
Nevertheless, all things came to a halt when the opposition YSR Congress party took over the state after the Indian’s general election in May. The new Chief Minister Jaganmohan Reddy was not keen to pursue the project which was seen as a brainchild of the previous Chief Minister Naidu. Chief Minister Reddy has accused the Naidu’s government of corruption regarding the way land was acquired, as well as other improprieties including insider trading.
Simultaneously, both the World Bank and Asian Infrastructure Investment Bank (AIIB) have withdrawn the US$500 million of funding for the new capital. Due to politics, Modi’s central government has also dropped its support for the Amaravati development.
After Reddy was appointed as the new Chief Minister of Andhra Pradesh, Singapore High Commissioner to India Lim Thuan Kuan, alongside officials from Singapore’s Ministry of Trade and Industry, met him in a bid to improve relations resulting from the takeover. The High Commissioner reportedly told the Chief Minister that over Rs20,000 crore (S$4 billion) worth of investments have already been made by Singapore companies in Andhra Pradesh. Of the S$4 billion, the majority would have come from those Temasek-linked companies.
At the India-Singapore Business and Innovation Summit held in Singapore on 10 Sep, Singapore Foreign Minister Vivian Balakrishnan diplomatically asked everyone to give the new state government time to sort things out. He said, “I would ask everyone to give time to the new government in Andhra Pradesh to sort out its priorities, then allow the private sector to make its own decisions, rationally, on commercial grounds.”
Singapore government shocked?
In any case, with the Wednesday’s termination announcement made by the new Andhra Pradesh government, it was reported in another Indian news media that the Singapore government was “shocked” by the move (‘CM Jagan Shocks Singapore, Cancels Deal‘).
“Singapore Government, which has been waiting for AP CM YS Jagan’s decision on Amaravati Start-Up Area Project, has finally got a rude shock with Jagan administration decided to cancel the pact with the Singapore Consortium,” it reported.
Minister Iswaran, the minister involved in the Amaravati project did not say or comment about the cancellation of the project by the Andhra Pradesh state government.
The only thing the minister said on his Facebook page on the day the termination announcement was made was that Singaporeans should learn CPR and AED skills.