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Amaravati capital city startup area project terminated: Sembcorp

SEMBCORP Industries on Tuesday said the project to develop a 684 hectare startup area in Amaravati, the new capital city of Andhra Pradesh, has been terminated.

Its joint development company Amaravati Development Partners (ADP) and the state government of Andhra Pradesh had mutually agreed to terminate the project “following the change in scenario” for the development of the capital city.

As the project is still in early stages and the land in the area has yet to be developed, costs incurred amount to “a few million dollars”. This are for design services prior to starting execution works on the ground, the conglomerate said in a regulatory filing.

The project’s development was expected to take over 20 years in partnership with the Andhra Pradesh state government.

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Sembcorp added that the closure of the project would not in any way impact CapitaLand’s and Sembcorp’s investment plans in India, which remains a key market for both groups.

The project’s closure is also not expected to have any material impact on the earnings per share and net asset value of Sembcorp for the financial year ending Dec 31, 2019, it added.

In June 2018, a shareholders agreement was finalised for a consortium formed by Sembcorp and Ascendas-Singbridge - now part of the CapitaLand group, and Amaravati Development Corporation - an Andhra Pradesh government agency, to develop the startup area.

This saw the consortium having a joint 58 per cent stake in ADP, with the remaining 42 per cent held by Amaravati Development Corporation. The consortium was appointed in 2017 to develop the startup area.

The Andhra Pradesh government sought Singapore's help in 2014 in planning the new capital, the brainchild of its then chief minister N Chandrababu Naidu.

In a separate announcement, Singapore's Minister-in-charge of Trade Relations S Iswaran noted that the newly elected government of Andhra Pradesh had decided not to proceed with the startup area given its other priorities for the state.

"Companies recognise such risks when venturing into any overseas market and factor them into their investment decisions," he added.

Mr Iswaran added that Singapore companies remain interested in opportunities in Andhra Pradesh and other Indian states because of the size and potential of the market.

The Singapore government’s economic agencies will also continue to help companies internationalise by exploring opportunities in India and other overseas markets.

Sembcorp and CapitaLand shares were trading higher as at 1.54pm on Tuesday after the news. Sembcorp shares were up 1.8 per cent or four Singapore cents to S$2.31, while CapitaLand was up 1.1 per cent or four Singapore cents to S$3.71.