Kerala opposition leader writes to CM to withdraw decision to close SmartCity Kochi project and ‘compensate’ Tecom

Kerala Opposition Leader VD Satisan (File) | Photo credit: PTI

Kerala opposition leader VD Sathisan has written to Chief Minister Pinarayi Vijayan demanding a halt to the “unilateral” decision to pay “compensation” to Dubai-based promoters of the SmartCity Kochi project.

“If there is a provision (in the original framework agreement) instead of taking ‘compensation’ from the company, it is against the interest of the state to compensate Tecom. The Company shall not be compensated at any cost. Allegations that the real estate industry is behind the government’s move are widespread,” Mr. Satheesan noted in a letter dated Monday (December 16, 2024).

The Kerala Cabinet had decided to formulate an exit policy for Tecom on the recommendation of a Chief Secretary-level committee. It has also been decided to form a three-member committee to recommend an independent evaluator to formulate the provisions of the policy.

In the letter, Mr. Satisan has mentioned the said Article 7.1.1. The framework agreement authorized both parties to recover all investments and losses from the other party for failure on the part of Tecom or the government. Section 7.2.2. Accordingly, in the event of Tecom’s failure, the government was entitled to recover from the company all its investments and losses as “verified by an independent firm of chartered accountants appointed jointly by the parties”.

He said that section 11.2 also has the responsibility of the company. “Tecom and its Permitted Affiliates shall be jointly and severally liable to indemnify, defend and hold GoK (Government of Kerala) and society liable for damages arising directly or indirectly from: (a) any breach of any warranty or Tecom. of this Agreement; or (b) breach any covenant or agreement of Tecom contained in the Agreement,” the letter states.

“The government’s decision to close the SmartCity Kochi project and pay Tecom is mysterious. Therefore, it is requested to cancel the unilateral decision of the government,’ he said.

Mr. Satheesan recalled that the project envisages boosting the state’s IT industry and creating 90,000 jobs in 10 years.