Andhra Pradesh cancels project by Singapore consortium for Indian state's new capital city

Andhra Pradesh cancels project by Singapore consortium for Indian state's new capital city

A staggering $15 billion is needed to transform Amaravati from a few shiny buildings, villages and
A staggering $15 billion is needed to transform Amaravati into the envisioned capital of Andhra Pradesh, one of India's largest states AFP/Handout

SINGAPORE: A project by a Singapore consortium to build part of a new capital city for the Indian state of Andhra Pradesh has been cancelled, said Singapore's Ministry of Trade and Industry (MTI) in a press release on Tuesday (Nov 12).

MTI said the decision to close the Amaravati Capital City Start-Up Area project was made by Andhra Pradesh in a government order on Monday.

The ministry added that the closure was "based on mutual consent" between the Andhra Pradesh government and the Singapore consortium, consisting of Ascendas Singapore (now part of CapitaLand Group) and Sembcorp Development.

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Surbana Jurong was the lead consultant in planning, urban design and conducting economic studies, positioning and infrastructure-industrial estate planning, according to the company's website.

A total of 7,000 sq km had been slated for land use for the capital region, and almost 50 million people had been projected to be involved in the urbanisation project, said Surbana Jurong.

amaravati andhra pradesh
Illustration of Amaravati, new capital city of the Indian state of Andhra Pradesh. (Image: Surbana Jurong)

The Ascendas-Sembcorp consortium was appointed by the Andhra Pradesh government in 2017 to develop a 6.84 sq km start-up area for the state's planned new capital city, said Minister-in-charge of Trade Relations S Iswaran.

The Andhra Pradesh government has decided not to proceed with the project "given its other priorities for the state", the minister added.

The city was the brainchild of the state's former chief minister, N Chandrababu Naidu, who lost power in elections in May.

Since December 2014, Singapore had been playing a vital role in building Amaravati, a city which had to be created from scratch after Andhra Pradesh lost its former capital Hyderabad to the newly formed state of Telangana.

The cancellation came after the World Bank in July withdrew a US$300 million funding for Amaravati's construction, following the Indian central government's decision to cease its support for the project.

It also prompted the Beijing-backed Asian Infrastructure Investment Bank (AIIB), which was due to finance US$200 million of the project, to review its involvement.

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Noting that companies recognise the risks involved in overseas ventures and factor them into their investment decisions, Mr Iswaran said: "In this instance the Singapore Consortium companies have stated that the project has cost them a few million dollars, and that its closure does not impact their investment plans in India."

He added that Singapore companies continue to take interest in opportunities in Andhra Pradesh and other Indian states "because of the size and potential of the market".

"Our economic agencies will continue to help our companies internationalise by exploring opportunities in India and other overseas markets,” said Mr Iswaran.

Source: CNA/Reuters/jt(hm)