KIIFB plans 90cr office amid crisis

T'puram: If its growing financial commitments are not enough of a problem, the Kerala Infrastructure Investment Fund Board (KIIFB) is looking to construct a new office building here. Estimates put the cost of construction at Rs 90 crore, but this could very well exceed Rs 100 crore. This is in addition to an office rent of Rs 13.74 crore, a figure confirmed by finance minister KN Balagopal in the assembly, it paid since 2015.
From a modest Rs 12.10 lakh in 2015-16, the rent paid by KIIFB amounted to Rs 2.5 crore in 2023-24, not just owing to its timely revision but also because of the acquisition of more office space for functioning. The agency issued an expression of interest (EOI) to acquire land or office space for construction, and business groups like that of Sunny Varkey, M/s Muthoot FinCorp and M/s Star Hill Real Estate submitted their tenders, as per the minister's disclosure.
The timing and scale of this expenditure raise questions. When Secretariat Annexe-II was completed, many govt departments shifted from the main Secretariat building, freeing up significant office space. However, agencies like KIIFB and Rebuild Kerala Initiative (RKI), formed after the 2018 floods, opted to rent private office spaces instead of utilising govt infrastructure. KIIFB is pushing ahead with its office construction plan when several govt-owned buildings in Thiruvananthapuram are vacant.
The huge office space that used to house Air India's office in Vellayambalam is a case in point. It now houses the Kerala Public Enterprises (Selection & Recruitment) Board, the newly formed agency headed by former chief secretary VP Joy, that hardly requires such a large office. The moot question is why should taxpayers be burdened with such an expense for KIIFB's new headquarters when govt buildings are underutilised.
TOI had reported the precarious financial position of KIIFB on Tuesday, as revealed in its annual report for 2023-24. The agency spent Rs 3,505.01 crore of Rs 5,803.86 crore it raised in the last fiscal year purely on debt repayment rather than new infrastructure projects. It committed over Rs 80,000 crore towards various projects, but several approved projects are yet to start.
Govt is also forced to rethink its revenue strategies for the agency in this backdrop. KIIFB is heavily dependent on govt revenue sources, particularly the Motor Vehicle Tax and fuel cess, and their long-term sustainability remains uncertain. After repeatedly asserting that infrastructure projects would be built without tolls, govt is now considering implementing a toll system for several roads developed under KIIFB.
Ironically, the plan for a Rs 100-crore headquarters for KIIFB comes against the backdrop of govts and businesses worldwide shifting towards cost-effective office spaces, hybrid work models and digital operations.