Andhra changes selection norms for IT park developers

The Andhra Pradesh government led by Y S Rajasekhara Reddy has made sweeping changes in the selection procedure for the IT park developers which will see more players "� many of them with local tags "� qualifying to bid for the new ventures.

In fact, the Andhra Pradesh Industrial Infrastructure Corporation (APIIC), the government's nodal agency, has already made use of the changed policy by further relaxing the earlier norms for the proposed five IT parks in the state.

Four of these new IT parks are proposed to be developed at Hyderabad and one in the port city of Vizag. The land earmarked for each of these parks ranges between 60 acres and 150 acres.

The changes effected by the Congress government are a big departure from the days of N Chandrababu Naidu. In the changed scenario, even a joint venture of two or more companies and those with a sound house building experience are now eligible for prequalification.

The norms fixed by the TDP government had in effect allowed only a few big companies to qualify and the selection was made through invitation. The TDP government's inclusion of prior experience in building infrastructure for software operations as an eligibility norm ensured that local builders could not participate in these projects.

For example, when engineering and construction giant Larsen & Toubro was selected for developing the Hitec City project in 148 acres of land at Madhapur, only seven companies were invited. And when the Rahejas were selected for an IT project again in the Hitec City area only three companies had been invited for bidding.

In the present case, about 22 companies have applied for prequalification for the proposed five IT parks in the state. APIIC has recently issued a notification inviting EoI from companies and has further relaxed the norms by reducing the requisite annual turnover to Rs 75 crore from Rs 100 crore.

Additionally, the government has changed the norms to ensure that whoever bids the highest for the land at the auction will be awarded the contract for the development of the IT park on a 'design, build, finance, market and operate' basis.

This would mean that the projects would be a completely private affair with the state having no stake in them, unlike during the earlier projects where APIIC had a stake.

In the earlier instances APIIC was entitled to an 11 per cent equity in the project mainly in return for the land provided. Now, instead of having any stake in the project, the APIIC will keep with itself a 10 acre plot in each of these designated IT parks and will sell it to people at a higher premium on a later date, if it wishes, D Parthasarathi Rao, APIIC's project head for IT parks, told Business Standard.

Significantly, all the benefits that have been announced for the IT sector will only be extended to the software and other IT companies who set up their operations in these parks and is not applicable to the developers.

Earlier, even though the Rahejas were a real estate developer, they availed concessions meant for IT companies for their project from the earlier government.

"The government gives IT park status to these places, provides approach roads and other infrastructure facilities at the doorstep besides supporting the developer in getting other clearances for the completion of the project," Parthasarathi Rao, said.

APIIC will also have the authority to fix the upset price for land where ever an IT park is proposed with total private participation, he said.

As per the fresh notification issued by the APIIC, the minimum technical qualification for eligibility to bid for the IT parks include norms like the company concerned should be in existence with a credible track record in construction activity for a minimum three years, and should have a minimum net worth of Rs 50 crore.