Andhra signs MoU with Dubai govt for development

The Andhra Pradesh government and the Department of Economic Development, Government of Dubai, on Saturday signed a memorandum of understanding (MoU) on mutual cooperation for the development of the proposed 165-kilometre, eight-lane outer ring road (ORR), Knowledge Corridor project and clusters around Hyderabad.

While the first two projects alone are expected to cost more than Rs 5,000 crore, about two dozen clusters or satellite townships proposed along the outer ring road project are expected to require even bigger investments, which are likely to be developed in the private sector.

The MoU is intended to prepare concrete business plans for each of these components along with investment models within 90 days from the date of signing the document. Both the parties are expected to sign a definitive agreement once the development plans of all the projects are put in place.

The MoU proposes to set up special purpose vehicles (SPVs) by both the governments to implement these projects. The shareholding pattern of SPVs would be decided based on the requirement of each of the projects keeping in mind the larger public interest and also the public-private partnership model, the MoU said.

K V Rao, principal secretary to the Andhra Pradesh government, Infrastructure & Investment Department, and Mohammed Ali Alabbar, director-general, Department of Economic Development, Government of Dubai, signed the MoU in the presence of chief minister Y S Rajasekhara Reddy.

The Dubai government's Department of Economic Development has submitted a concept plan to the state government with regard to all these projects based on which further steps would be initiated.

K V Rao said the Dubai government's role in terms of bringing investments or equity participation or the funding pattern of each of these projects would be concretised only after the detailed business plans are drawn.

Rao said that the clusters of townships proposed along the outer ring road would meet the dual purposes of financing the ORR project, which is expected to cost more than Rs 3,000 crore on one hand and decongest the city of Hyderabad on the other.

This means, the ORR project would be largely based on self-financing model. The land acquisition for the ORR alone requires an investment of about Rs 700 crore.

Except in the case of land required for the outer ring road and other basic infrastructure, the government will not go for land acquisition for any other project specified in the MoU. Instead, the land owners would be roped in as shareholders for the respective projects, K V Rao said.