DHUMAL SLIPS ON SNOW
High court pulls up the state government for flip- flop over a Rs 2,750- crore ski resort
Himachal Pradesh is on the verge of losing out on a $ 500 million ( Rs 2,750 crore) ski valley project because its government couldn’t make up its mind. In 2004, then Congress chief minister Virbhadra Singh had given the Himalayan Ski Valley ( HSV) project the go- ahead, but in January 2010, the subsequent BJP government scrapped it. This was touted to be the largest FDI project in the tourism sector. The policy reversal earned the Prem Kumar Dhumal government a scathing rap from the Himachal Pradesh High Court. “Governance is a continuous process, there should be consistency in the policy matters taken by the state government,” said Justice Ravi Sharma in his June 22 order.
It was in January 2004 that Alfred Ford, the great grandson of Ford Motors founder Henry Ford, met Virbhadra Singh and proposed a ski resort in the Kulu Valley. “This was to be India’s answer to Davos. It would have provided employment to over 3,500 people,” says John Sims, an American hotel developer and managing director of HSV.
Singh gave them the go- ahead and a memorandum of understanding was signed between the state government and HSV in December 2005. Three months later, the state government approved the detailed project report. Work began on the project as Sims and his team began scouting for the 100- acre plot on which the ski resort was to be built and sent 60 local residents to Finland for training as ski instructors. The promoters hired construction major Shapoorji Pallonji Group and roped in luxury group Six Senses Resorts and Spas. But once the government changed hands in 2007, so did its policy towards the project. In 2008, a committee was set up to review the project. It recommended cancellation. On January 7, 2010, the government cancelled the project.
“First they ( BJP government) spent two years poring over our plans, then we started spending money, and now they say, sorry we were just kidding. I didn’t get the punchline, but I did get punched,” says Sims. Interestingly, the committee’s recommendations, which seemed to sway Dhumal, did not impress the court. In its judgment, the court observed that “it is duly established that the state government had already made up its mind to cancel the project and the issuance of notice based on the recommendations of the committee was merely a ritual. The notice issued to the company dated 7.1.2010 is without jurisdiction and authority of law.”
Soon after the high court verdict, Dhumal had told the media that he would appeal against it. He said, “It is not the government which was opposed to the project. We had held a public hearing at the project site. Locals and NGOs objected to the project as they feel it is not only environmentally unsustainable but will also desecrate land.” Those who opposed the project had even claimed that the deities were against it. This had a powerful impact in swaying local sentiment against the project. Another objection was that the entire project was a ‘ clever ruse’ to grab local land.
“We were creating 3,500 jobs on 100 acres of land. Why would I want to grab land? I’m not going to start a naval base there. The land is three times the price of land in Colorado,” says an irate Sims, pointing out that the court had struck down every single excuse cited by the state government. Although the court has given the project the go- ahead, eight years and Rs 100 crore on, HSV promoters are not sure if they want to continue. With the state poised for elections in November, Sims and Co. are not sure if they can handle what he refers to as “the capricious behaviour” of another state government.
This is yet another example of how India is sending a confused message to foreign investors. While the Vodafone retrospective tax controversy and the flip- flop over FDI in retail has grabbed headlines, the case of the HSV project has gone somewhat unnoticed.
THE DHUMAL GOVERNMENT SCRAPPED THE SKI RESORT PROJECT THAT THEN CHIEF MINISTER VIRBHADRA SINGH HAD APPROVED IN 2004.