Dubai firm could lose out on Smartcity plan

Written by M Sarita Varma | Thiruvananthapuram | Updated: Dec 4 2009, 04:08am hrs
Its a 'take it or leave it' moment for Dubai-based Tecom Investments, as it gears up for the final round of talks with Kerala government to end the deadlock over the IT infrastructure joint venture Smartcity in Kochi. As if the gloom of Dubai debt woes was not enough, Tecom is likely to face the humiliation of its mantelpiece Indian investment in the $400-million Indian project to be passed over to other aspiring investors.

When asked about the offer from Muthoot Pappachan Group, chief minister VS Achuthanandan said, There is no dearth of potential investors for Kochi Smartcity, at this point. Including one of the top firms in the US, there has been quite a few investors keen to take up the project, if Dubai Tecom backs out." Muthoot Pappachan Group had announced its interest to substitute the Dubai partner in the Smartcity venture, in case Tecom backs out.

The 8.8-million sq ft IT infrastructure plan, envisaging 90,000 direct jobs in 10 years, had been dragging feet for the last two years, with both partners- Kerala government and Dubai Tecom- often slipping into a war of words. Farid Abdul Rahman, CEO, SmartCity Kochi, points out the state government gives no assurance that 12% of the land meant for the project would be freehold.

Meanwhile, the Gulf-based investors, who had competed with Tecom, right before it inked the Smartcity MoU in 2007, do not anymore enjoy deep pockets. For instance, Dubai-based Emmar group, world's largest real estate developer (in terms of market capitalisation), had, then, offered to invest in IT infrastructure in Kochi and Thiruvananthapuram through its Indian arm Emmar-MGF. Significantly, chief minister was cautious at this juncture not to reiterate his familiar refrain that Tecom was short of resources. Asked if the Dubai financial crisis could hit Kochi's dream project, Achuthananthan said, "There is no need to drag it into the SmartCity picture." Only last week, Tecom came out with a rejoinder to Achuthananthan for his earlier comments that the Dubai firm's financial state was pathetic. "Comments that may question our commitment or our legal obligations towards this very important project are misplaced,", SmartCity Kochi CEO said. To demonstrate the financial stability, the company even invited Kerala chief minister to visit its Dubai business facility. In response, the government invited Tecom for talks on the freehold-dispute. This time, the Dubai firm has agreed to call on Kerala within one or two weeks.