SmartCity Kochi project not shelved, says CEO

SmartCity Kochi project, the planned IT township in the Indian state of Kerala to be developed by SmartCity, a subsidiary of Tecom Investments, has not been shelved, the head of SmartCity has said.

SmartCity Kochi is a joint venture between SmartCity and the Government of Kerala, spread on an area of 246 acres.

“The project has not been shelved. However, there are a lot of documentation and formalities that have to be finished before we start the project. For example, since the project is planned to be a Special Economic Zone [SEZ], SmartCity has to fulfill various criteria. Once we meet these criteria we’ll be able to get an SEZ status,” Fareed Abdulrahman, CEO, SmartCity, Dubai, told Emirates 24|7.

However, he said there are many issues that need to be sorted out.

“For instance, there is the issue of SEZ. As part of the agreement between SmartCity and the Government of Kerala signed on May 13, 2007, there has to be only one SEZ in the project, but later it was rejected and we were told that we’ve to split one SEZ into two or three SEZs,” he said.

Additionally, Abdulrahman said there is the issue of freehold land rights that was made clear in the framework agreement, but now the authorities are in denial mode of providing the freehold rights to us.

There are other issues as well such as stamp duty exemption, shifting of the PWD (public works department) road that has to be shifted so that we can apply for an SEZ status, since SEZ land has to be devoid of any construction or structure.

However, Abdulrahman added: “Negotiations are underway between us and the Government of Kerala to remove the hurdles and start the project. We have put forward a number of suggestions and proposals to the authorities in Kerala on how to move ahead towards resolving these issues, but we’re yet to receive a positive response. From our side, the responses have been positive and we remain committed to the project.”

SmartCity is a global network of self-sustained townships for knowledge-based industries based on the model of Dubai Internet City, Dubai Media City and Dubai Knowledge Village. Currently, SmartCity’s projects are SmartCity Malta and SmartCity Kochi. Phase I of SmartCity Malta was launched on October 10.

“Soon we’re going to start the Phase II of the project after the tender process gets over and after we get a few permits,” Abdulrahman said.

In Kochi, he said, SmartCity has so far invested in land acquisition, master-planning and the design of the project.

“Additionally, we’ve finished the fencing of the entire project land and are also marketing the project even though the project has not started,” he added.

Asked when does he believe the project will take off, he said: “As far as we’re concerned, we expect that by the first half of next year the project has to start. We are of the belief that India has a lot of potential and we don’t believe there are any choices left before us.”

“We’re committed to finish off one SmartCity project, deliver it, and then move to building another such project in other Indian cities,” he added.

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Tecom successfully launched Smartcity Malta

Even as the stalemate over Kerala's mega IT infrastructure project SmartCity Kochi gets more complex, Tecom, the enstranged investment partner of the project, has successfully launched a similar project in Malta.

SmartCity Malta (SCM) was inaugurated in Ricasoli by Prime Minister Lawrence Gonzi on Sunday with the chief executive officer of Dubai Holding Ahmad Bin Byat and Tecom Investment Group's CEO Abdullatif Al Mulla also present.

The first phase of SCM will have 12,000 sqm of office space targeted at international, regional and local companies, according to a company release.

Meanwhile, the fate of SmartCity Kochi project hangs in the balance with the state government and Tecom each sticking to their positions.

The state government had issued an ultimatum to Tecom in June with a view to terminate the contract with the Dubai company and ultimately to expel it from the project. The government had prepared the letter after hectic legal consultations in order to avoid loopholes in it.

In a recent reply to the letter, Tecom has said that it has a real interest in commencing the project and has no plans to back out of it. The state fisheries minister and chairman of the joint venture company between the Kerala government and Tecom, S Sharma said that the cabinet would discuss the reply and take an appropriate decision.

From the events so far, it is clear that the government's intention is to end its association with Tecom. The minister said that Tecom had only business interests in the project, and that the Dubai company was deliberately exploiting the interest of the people of Kerala in the project.

The differences between the two partners centre on Tecom's demand for a freehold of 12 per cent of the total 240 acres of the project site with a right to sell. Sharma said this was against the framework agreement between the government and Tecom, and the government could not accept this additional condition.

Since the state is now election mode with local body elections set for October 23 and 25, a decision on the reply sent by Tecom is expected only after the elections. Interestingly, this is a hot issue in the campaigns of both LDF and UDF, particularly in Ernakulam district.