A mixed development project with the Andhra Pradesh government in its new capital city in Amaravati has been terminated due to a “change in scenario”, according to Sembcorp Industries.
The Business Times reported Sembcorp as saying on Tue (11 Nov) that the costs incurred so far by the Amaravati Capital City Start-up Area project amount to “a few million dollars”, due to the project being in its early stages.
The costs incurred were also for design services prior to the commencement of ground works, Sembcorp noted in a regulatory filing.
The Singapore consortium, comprising Ascendas-Singbridge — a subsidiary of CapitaLand Group — and Sembcorp Development were made master developers in 2017.
Sembcorp said on Tue that termination of the project, however, will not damper its investment plans in India, as well as those of CapitaLand.
The closing of the project is also unlikely to bring any significant impact on Sembcorp’s earnings per share and net asset value for the financial year ending Dec 31 this year, the company added.
“Companies recognise such risks when venturing into any overseas market”: Minister-in-charge of Trade Relations S Iswaran
In a separate statement the same day, Minister-in-charge of Trade Relations S Iswaran said that the Singaporean companies “remain interested” in opportunities in Andhra Pradesh and other Indian states due to the size and potential of the market.
“We note that the newly elected Government of Andhra Pradesh has decided not to proceed with the Start-Up Area given its other priorities for the state,” he said.
Mr Iswaran added that “companies recognise such risks when venturing into any overseas market and factor them into their investment decisions”.
“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,” said Mr Iswaran.
The Singapore Consortium was appointed by the GoAP in 2017 to help master develop the 6.84km2 area in its new capital city, Amaravati.
The termination of the project follows the GoAP’s announcement on 30 Oct that the Amaravati capital project has been formally scrapped.
Earlier in September, Mr Iswaran responded to supplementary questions from Worker’s Party NCMP Leon Perera regarding the total expenses made by Singapore companies in relation to the Amaravati project to date.
Mr Perera also asked the Minister a question on whether there has been “significant expenditure of state funds” in the form of co-investments or grants to support the Singapore companies in their venture.
Mr Iswaran said that no state expenditure was involved in the project, adding that the investments made by Singapore companies in the project are ‘commercially confidential’.
“I am not privy to the details, and I am therefore not able to give the Member a response,” he added.
However, he assured Parliament on the question of “whether there were any subsidies or grants by the Government for investments in the [Amaravati] state” that the answer is “no”.