Jagan government says it secured sweeter terms from GMC, Navayuga, Greenko

Deccan Chronicle.  | N VAMSI SRINIVAS

Business, Companies

The projects, promoters and agreements remain the same

The GMR group has been retained as the concessionaire for the Bhogapuram airport project.

Vijayawada: Chief minister Y S Jagan Mohan Reddy has extended an olive branch to big corporate houses such as GMR, Greenko and Navayuga, paving the way for implementation of mega infrastructure projects including Polavaram.

This is a strategic move by the YSR Congress government to shake off the tag of being a retrogressive regime, a criticism levelled against it when it decided to review projects sanctioned by the previous TDP government.

An immediate outcome of this move would be the removal of litigation arising out of its decision to scrap a power project deal with the infrastructure company Navayuga. Sources said the government and Navayuga reached an amicable settlement in which Rs 100 crore paid by the company towards taxes and Rs 200 crore paid towards equipment would be adjusted against the mobilisation advance of Rs 700 crore given to Navayuga by the previous TDP regime.

On its part, the government will not encash the company's bank guarantee of Rs 300 crore, as it had threatened to do earlier, and Navayuga has agreed to go in for arbitration for the remaining Rs 400 crore.

A senior government official confirmed the decision not to encash the bank guarantee and the company's reciprocal gesture of withdrawing the litigation it had initiated against the government.

The status of the Bhogapuram airport project in Visakhapatnam district to will change as a consequence of the government's olive branch offers to big business. While in the opposition, the YSR Congress accused then chief minister Chandrababu Naidu of favouring GMR over the Airports Authority of India for this project. Now, while deciding to retain GMR as the concessionaire, the chief minister has set a condition that 500 acres out of the 2,700 acres earmarked for the project should be retained with the government.

“The projects, promoters and agreements remain the same,” said T. Vijaykumar Reddy, commissioner for information and public relations, claiming that the government managed to secure better terms through this device of review and renegotiation.

The YSRC government's decision to red-flag Greenko's integrated green power project in Kurnool district drew international attention and invited pressure from the central government to honour the previous agreements. The project was designed to set up a facility to generate 1,000 MW of solar power, 550 MW of wind and 1,880 MW of hydel power on 4,600 acres.

While the TDP government fixed the land cost at Rs 2.5 lakh per acre, we enhanced it to Rs 5 lakh, which means Rs 238 crore revenue accrued to the government upfront,” said Ajay Kallam, principal advisor to the chief minister.

In addition, Greenko agreed to pay a green energy development fee of Rs 1 lakh per MW every year for the first 25 years and Rs 2 lakh per MW per annum for the remaining period of the project, which is likely to be 75 years. The annual revenue for the state will be Rs 31 crore, or Rs 3375 crore throughout the life span of the project, he added.