In its report tabled in the Assembly today, the Comptroller and Auditor General of India said, "There was lack of transparency right from the conceptualization stage about the justification for a Smart City and the need for creation of a new Special Purpose Vehicle (SPV).”

The state government had formed a joint venture company in January 2008, with the status of a SPV termed Smart City (Kochi) Infrastructure Pvt Ltd with TECOM Investments FZ LIC Dubai (Tecom), a subsidiary of Dubai Holdings,an investment company owned by the Government of Dubai for setting up the IT park at Kochi.

On leasing out 246 acres of land for 99 years for the SPV at a onetime lease premium of Rs 104 crore, the report said it was done without properly assessing the land requirements for the project and also without valuation for fixing lease amount.

"Had the transfer value of the land been fixed considering the market value prevailing in the state, government could have been fetched more revenue. Due to failure to monetize the market value of land, government suffered huge loss of revenue which was beneficial to SPV," the report said.

Selection of partner for the joint venture project with state having a meager 16 percent share was done without any expression of interest. "There was undue favour given to the SPV at almost every stage of the project starting from the selection of partners," the report said.

Stating that the government has no control over the affairs of the SPV, it said, "The chief minister shall be the chief patron of the Smart City. This title is only an ornamental one with no control over the affairs of the company."

"Neither the government nor the SPV is able to spell out any precise timeframe within which the project, originally estimated at an investment of Rs 1700 crore, can achieve the objectives," the report said.

"Even after seven years from signing agreement, construction of 8.8 million sq feet built up space and creation of 90,000 jobs are far from sight," it added.


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