The Andhra Pradesh government on Thursday said the agreement with UAE-based Lulu Group was terminated because it was faulty and against rules.
Industries minister Mekapati Gautam Reddy said project was cancelled mainly for two reasons.
One problem was there was a dispute on the land and second problem was it was against environmental norms. Moreover, standing guidelines are that a single bid should not be accepted.
On the reported statement of Lulu Group that it would not invest in Andhra Pradesh again, the minister said the government had not received any valid document from the Lulu Group saying that they would not invest in the state.
He said the cancellation of land by the government was not against the Lulu Group but the procedure that was followed by the previous government in the issue.
The minister said that the government found fault with the rental agreement as price at just Rs 7.09 crore per month is not feasible as it would cost around Rs 50 crore according to present market value. Moreover, he said the previous government had not adhered to environmental norms in leasing the land in the beach area.
Lulu Company and previous government had signed an agreement one year ago. What has stopped them from starting construction all these months, the minister asked. By now they should have completed eight floors, which is means there is an inherent problem.