NICE Agreement Annulled

Moving a step closer towards terminating its agreement on the Bangalore-Mysore Infrastructure Corridor project, the Karnataka government on Thursday decided to revoke clauses pertaining to transfer of lands to the project promoter. The cabinet, chaired by Chief Minister H D Kumaraswamy, decided to annul certain clauses of the agreement signed between the Government and Nandi Infrastructure Corridor Enterprise (NICE) on August 9, 2002, which provides for alienation of land through absolute sale deed. The cabinet decided to seek the Supreme Court's permission to enter into a new agreement with Global Infrastructure Consortium which has come forward to execute the BMIC project using only 21,193 acres of land, Minister for Primary and Secondary Education Basavaraj Horatti told reporters here. The government is also contemplating floating international bids to find whether it gets a better bid than the GIC to implement the project. DH Source

There are two parts to this one is framework agreements and their violations and another is swiss challenge on the back of which Govt wants to cancel the project. There are two agreements: 1) 1997 Original Framework Agreement, signed during JH Patel’s term, and 2) 2002 Agreement signed during SM Krishna’s term. HC & SC want the project to be implemented in letter and in spirit according to the April 1997 Framework Agreement. #1 How to stick to 1997 Agreement? State Government/Dgowda (SGDG) has annulled of 1.1.3 clause of the 2002 agreement, because it wants to restrict the scope of the project “to the terms of the original framework agreement” signed in 1997. NICE calls the 2002 agreement as the Tripartite agreement and says its cancellation is an “indirect violation” of HC and SC orders requiring to stick to the 1997 Framework Agreement. So they differ on what sticking to the 1997 agreement means. #2 Selling Land By annulling the 1.1.3 clause of the 2002 agreement, the State Government has barred NICE from selling land available to it to a third party. NICE says that the Framework Agreement had clauses that said the Government would not restrict the use of the land in any way, and the company should have full freedom and discretion to industrially and commercially develop and use the land, as generally contemplated by the agreement. The Hindu is saying that not being able to sell land to a third party is a setback for NICE since it wants to raise funds using the real estate adjoining the expressway. Here is SGDG’s argument: the project was about expressway and 5 townships. Where did the real estate adjoining expressway come into play? Kheny says that expressway is not just roads, but associated facilities like bus bays and truck terminals. Further he says, that he is using that to compensate land losers, who would benefit if sites nearer to BLR is given. But so far, IMTA’s BIEC (Tumkur Road), Freedom Park and proposed film center at clover interchange are examples of projects on along the expressway. #3. Interchanges The State wants to restrict the project to 20,193 acres as per the terms of the 1997 FWA. No land at 10 major interchanges along the proposed expressway will be available to the NICE. The grant of land at the interchanges along the expressway is apparently part of the 2002 agreement and is not part of the1997 agreement. According to Government, apparently, the agreement “reportedly entered into in August 2002 had several insertions” which were not part of the one approved by the S.M. Krishna Cabinet. Does this mean there will be no extra land at interchanges or that there will be no interchanges at all? Without the interchanges, PRR’s utility will be reduced to half. See our discussion on ORR. #4. NICE's Rebuttal Now here is another googly, NICE’s rebuttal as of now to this is nuanced and confusing. According to NICE, Tripartite Agreement was signed only to assign the rights of implementation of the first phase of the project to Nandi Economic Corridor Enterprise (NECE) Ltd. The agreement, according to NICE, was signed only to facilitate speedier implementation of the project and for NICE to achieve financial closure and other administrative necessities, which would then let NICE focus on implementing the 2nd and 3rd phases of the project. NICE says, “Apparently they (the State Government) are under the impression that by canceling this agreement, they will take away the right of NICE for getting land by way sale deeds to implement the Bangalore-Mysore Infrastructure Corridor (BMIC) project,” said the statement. According to NICE, cancelling a “purely administrative agreement” did not take away the right of NICE from securing lands on sale deed basis. #5. But How Does That Bar NICE & Where Does GIC come in? That brings us to another question, so SGDG has stopped transfer of land, but how does that annul NICE from being the project implementor? Now this is where SGDG is on shaky grounds and NICE’s rebuttal is solid, as far as I can understand. Next post … Sources: Govt Scraps Pact NICE says Harassment State Can't Deny

Mysore Corridor In Trouble The Kumaraswamy government in Karnataka has fired another salvo in the legal battle being fought in the Supreme Court over the Bangalore-Mysore Infrastructure Corridor (BMIC) project. The government has decided to call for global tenders, even as a contempt petition filed against it by the implementing agency, the Nandi Infrastructure Corridor Enterprise (NICE) is pending in the apex court. The prestigious Rs.2,250 crore-project envisages development of five townships, bes ides the expressway between the two cities. Although the framework agreement was signed a full 10 years ago, it got stuck even in the first phase and the work has virtually ground to a halt, thanks to the cropping up of contentious issues and the legal tussle that ensued. At the heart of the BMIC-related controversy, as in the case of several others that have erupted in the State, is the allotment of land. The Janata Dal (S), now heading the government, has maintained that the extent of land made available to NICE has been a lot more than the requirement and that the excess should be returned to the farmers from whom it has been acquired. The Kumaraswamy regime has made it clear that it would abide by the court orders pegging the total land allotment to NICE at 20,193 acres. This means, the land abutting 10 major intersections on the proposed tolled expressway will not be handed over to the implementing agency. The government has now come up with its proposal for calling global tenders to get the project completed soon. In taking this initiative, the government has gone back to the 1997 framework agreement, annulling the 2002 tripartite agreement its predecessor entered into with the promoter and the special purpose vehicle. However, it has been indicated that NICE will be given an opportunity to match the lowest bid. More importantly, the Swiss model the government proposes to adopt provides that the successful bidder shall pay the existing agency the money it had already spent on the project. But the point is that nothing substantive can happen until the Supreme Court pronounces its verdict on the petitions before it. It is unfortunate that critical infrastructure projects across the country tend to get mired in controversies — mostly over land acquisition — and legal battles, which more often than not follow change of governments. And this inevitably puts off prospective investors from participating in such ventures. A significant part of the remedy lies in ensuring complete transparency in agreements between governments and the contracting parties and fairness in the compensation package, especially where land acquisition is involved.