Kerala Opposition Leader writes to CM seeking rollback of decision to wind up SmartCity Kochi project and ‘compensate’ Tecom

V.D. Satheesan opposes compensating Tecom for SmartCity Kochi project in Kerala, citing breach of original agreement and real estate interests.

Kerala’s Leader of the Opposition V.D. Satheesan has written to the Chief Minister Pinarayi Vijayan seeking to call off the “unilateral” decision to wind up the SmartCity Kochi project by paying “compensation” to the Dubai-based promoters of the project Tecom Investment.

“Compensating Tecom when there were provisions (in the original framework agreement) instead to charge ‘compensation’ from the company is against the interests of the State. At no cost should the company be paid compensation. Allegations are widespread that real estate business is behind the government’s move,” Mr. Satheesan noted in the letter on Monday (December 16, 2024).

The Kerala Cabinet had decided to draw up an exit policy for Tecom from the project as recommended by a Chief Secretary-level committee. A decision was also taken to form a three-member committee to recommend an independent evaluator to draw up the provisions of the policy.

In the letter, Mr. Satheesan cited that clause 7.1.1. of the framework agreement empowered both the parties to collect all investments and losses for failures on the part of Tecom or the government from the other party. As per clause 7.2.2., in the event of the failure of Tecom, the government was entitled to recover all its investments and losses from the company as “certified by an independent firm of chartered accountants jointly appointed by the parties.”

He pointed out that the clause 11.2 also makes it an incumbent 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 harmless for damages arising directly or indirectly from or in connection with: (a) any breach of any warranty or Tecom contained in this Agreement; or (b) any breach of any covenant or agreement of Tecom contained in the Agreement,” the letter cited.

“The government’s decision to wind up the SmartCity Kochi project and pay Tecom is mysterious. Hence, the government is requested to cancel its unilateral decision,” he added.

Mr. Satheesan recollected that the project was envisaged to give the State’s IT industry a fillip and to generate 90,000 jobs in 10 years.