Hyderabad Fab City is back in news again..
Negotiations between AP Govt and the promoter of Fab city are still on. Land allocation has come down from 1200 acres to 75 acres and has been adjusted to 300 acres now. Power and infrastructure issues have held up the agreement. Point of contention is on the subsidy for power/energy. Fab city needs 200MW per day and they want it to come at 1.80 per kwh for the next 15 years. Guess what, AP govt just signed a deal with Tatapower to buy energy at 6.00 per kwh. So, thats a 4.20 per kwh loss to the govt during peak months in 2006. Adjust for inflation and thats nothing but a giant black hole. My estimate is that it will equate to a subsidy of USD100 Million per year.
IMHO, situating this assembly and test plant in Hyderabad will not create any major incentives to the prospective customers or MNC's. Fab will certainly bring more jobs, but dont expect it to do the miracles that IT+ITES(BPO) did. In tech 20% of cost was static and 80% was human driven allowing MNC's to make huge investments. As mentioned in one of my old posts, 88% of cost is static in chip fab.. giving very little incentive for companies to move here in a large scale.
I really hope that the AP govt backs out of this whole deal and invests the USD100Mn per year in Power / Energy projects
1 comment:
With in a month one could see real-estate suicides in Fab city are, recently I talk to many of my friends and real-estate brokers they said that the land prices came down to half, current YSR government is totally corrupted and became a real-estate company, people who are planning to buy near by fab city or Shamshabad area think twice or thrice before buying, this area has more speculative prices than any other places in hyd.
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