CIDCO failed to recover damage dues, revenue share, development costs
The state-run CIDCO has failed to collect dues worth over Rs. 237 crore from the Navi Mumbai Special Economic Zone (NMSEZ) being developed by a consortium led by industrialist Mukesh Ambani’s Reliance Group. These are among the findings of the Comptroller and Auditor General’s report on Public Sector Undertakings for 2013.
The City and Industrial Development Corporation (CIDCO) is the nodal agency for the SEZ, which is being developed via Public Private Partnership mode. In 2003, CIDCO formed a Special Purpose Vehicle (SPV) with a private consortium to develop the SEZ on 2,140 hectares of land. CIDCO retained 26 per cent of the stake.
The consortium, which held 74 per cent of the stake, was formed by SKIL Infrastructure, Hiranandani Constructions and the Avinash Bhosale Infrastructure. Later, SKIL diluted its shareholding and the SPV came under the control of Reliance Industries Investment and Holding Pvt. Ltd. (RGIHPL), backed by Mr. Ambani. The SPV had the primary responsibility of developing the SEZ.
RGIHPL did not respond when approached for comment on the CAG report. Reliance Industries officials said the firm did not belong to their group but was part of Mr. Ambani’s personal investments.
The CAG report said the SPV repeatedly failed to meet its development deadlines and asked for extensions. However, the contract with CIDCO specified that extensions would come after payment of steep damage charges. The consortium argued that the global recession had impacted the marketability of the SEZ and that it had missed out on financial incentives in the absence of a Maharashtra SEZ Act.
The State government ended up revising the project’s milestones but did not recover damage charges. “The milestones for development activities was revised without recovery of damage charges which worked out to Rs.103.02 crores,” the CAG report said.
The CAG report also said that CIDCO failed to recover revenue and interest worth Rs 123.44 crore from the developer. According to the contract, the SPV was to pay a proportion of the revenue of the SEZ to CIDCO once it started generating revenue.
However, the project had not begun by 2013, and the only revenue it was generating was interest from fixed deposits. .
Read mor ehere – http://www.thehindu.com/news/national/mukeshbacked-sez-owes-govt-agency-rs237-cr-cag/article6146104.ece
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