Biz-friendly yesterday, Andhra Pradesh scaring off investors today

Jagan Mohan Reddy - The Federal
Jagan Reddy-led Andhra government ranked first in the implementation of rural development projects apart from four other categories

For a state that had consistently ranked first in the country in the Ease of Doing Business list till last year, it is ironical that Andhra Pradesh appears to be scaring away  potential investors now.

A series of policy moves by the Jagan Mohan Reddy government — including review and cancellation of major projects undertaken by the Chandrababu Naidu regime, and reserving jobs for locals in the private sector — has unnerved businessmen, both domestic and foreign.

There is a growing fear that Jagan’s penchant for reversing his predecessor’s decisions may have unintended consequences. This comes at a time when Andhra Pradesh is still grappling with bifurcation blues, after losing Hyderabad to Telangana and struggling to attract investments into the state.

Also read: Drone over Naidu house triggers row; Jagan govt says it was flood survey

In a rather unusual move, Japanese ambassador to India Kenji Hiramatsu cautioned Jagan against the arbitrary review of power purchase agreements in renewable energy sector and also raised concerns over the investment climate in the state.

The missive reflected a general sense of unease gripping business circles. “Many foreign investors, including Japanese companies, are now watching closely the situation unfolding in your state regarding the renewable energy sector,” Hiramatsu told the CM in his letter.

Advocating prudence, Naidu told Jagan in a tweet that he “should give up his obduracy and at least listen to what foreign countries are saying”.

Polavaram re-tendering row

Defying the Centre, the YSRCP government issued notifications on Saturday (August 17) calling for fresh tenders for works worth ₹4,900 crore, including hydel work component of ₹3,100 crore and a headworks project worth ₹1,800 crore. The bids are to be finalised by September 27.

The latest move for fresh tenders on the half-finished Polavaram irrigation project, weeks after cancelling an earlier contract awarded to Navayuga Engineering Company (NECL), has drawn flak from opposition and experts.

The multi-purpose ₹58,000 crore project across river Godavari, aimed at providing irrigation facility to over seven lakh acres of farm land in coastal Andhra besides producing 960 MW power, is being undertaken as a national project and the entire cost is borne by the Centre. However, the state government is fully empowered to execute the project.

The re-tendering order did not find backing from the Centre. Union Jal Shakti Minister Gajendra Singh Shekawat said it would delay the project. The Polavaram Project Authority (PPA), a central government appointed body of experts, voiced concerns over possible delays and escalation of costs.

The PPA did not concur with the state government’s argument that there were irregularities in the works awarded by the previous government and gave a clean chit to the NECL, causing a major embarrassment to the government.

PPA CEO RK Jain wrote to the state irrigation secretary, directing the government to stay the re-tendering process as it could lead to further escalation of costs and delay benefits accruing to the people.

“There is neither enough ground nor any necessity for pre-closure of tenders and re-tendering of project works. Such a decision will plunge the project into uncertainty,” Jain said in his letter.

Naidu said the PPA’s conclusion was a vindication of the TDP government’s decision to award the sub-contract to Navayuga Company. He claimed that all sorts of misinformation were spread about the TDP’s role in Polavaram project and charges were levelled against him and his party without any evidence.

“The YSR Congress government does not know and does not care to listen to others who are more knowledgeable. Its foolish and vindictive actions will have an adverse impact on the state’s future and the progress of crucial projects like Polavaram,” Naidu tweeted.

However, an eight-member technical committee appointed by the Jagan government found corruption in the execution of project works during the TDP regime.

There were irregularities in the tendering process for engineering, procurement and construction works, and Navayuga was paid ₹3,128 crore in violation of the prescribed norms, the committee said in its report.

Jagan and his party colleagues argued that re-tendering was absolutely necessary.

“The procedures adopted by the Chandrababu Naidu government were flawed since it allotted works on nomination basis,” the state Irrigation and Water Resources Minister Anil Kumar Yadav said. “We will save crores of public money with this re-tendering.”

Political vengeance

Going by the haste with which the government has been reviewing projects citing corruption and irregularities, it is clear that a politics of vengeance is guiding its policies.

TDP MLA from Rajahmundry G Butchaiah Chowdary has said that the government’s “vindictive attitude” had led to the stalling of important development projects.

However, the YSRCP leaders justified the move and launched a counter-attack, accusing the opposition TDP leaders of spreading misinformation over the project.

“The works on the project have been suspended temporarily. The re-tendering would be completed before November and from then on the works would be expedited. Water would be released by 2021, as promised,” said senior YSRCP leader Srikanth Reddy.

An unhappy Naidu said “despite insults and accusations, we had completed 70% of the construction work. In spite of all this, if the remaining 30% is not completed, Polavaram will remain a dream”.

Also read: Politics of vengeance throws a spanner in Andhra’s mega projects

The government’s measures taken in the last 70 days shows that Jagan is more interested in scoring political brownie points against the previous regime and exposing its alleged omissions and commissions than improving governance.

From the demolition of ‘Praja Vedika’, a swanky convention hall adjacent to Naidu’s rented riverside bungalow in Vijayawada to halting work in Amaravati the dream capital of Andhra, and cancelling the contracts of mega projects, the government’s actions have kicked up political controversies and raised questions over the fate of several key projects in the state.

It has also angered the Centre over its decision to review Power Purchase Agreements (PPAs) made during the previous TDP regime with solar and wind power producers. The Centre has warned that revisiting the PPAs would halt the flow of foreign investments into the sector, which holds key to meet environmental and power goals of the country.