In its hunt for cash to add to its coffers, the Karnataka government may have set its sights on the Bidadi township project near Bangalore. The government is expected to begin negotiations with Nandi Infrastructure Corridor Enterprises Ltd, or NICE, which was the sole executor of the project, to enter into a revenue-sharing partnership.

The 2,275-acre township is part of the Bangalore-Mysore corridor project and is expected to generate Rs5,000–7,000 crore in profits over 10 years.

M.N. Sreehari, an adviser to the government of Karnataka on traffic and infrastructure projects, said, “Bidadi’s proximity to Bangalore makes it a high-revenue proposition. The day has come for the government to rethink this township. It may offer a joint venture, or even go the public-private partnership way.”

The government may have overlooked this when it sold the land to NICE, he added.

But there is a catch. NICE officially owns the land and the state government has no legal rights to dictate terms to the company. People familiar with the development say the government is looking to reach an amicable arrangement by asking for a 25% share in the revenues, in return for relaxing the development cess from 10% to 2-4%. Talks on this front are expected to begin after the Lok Sabha elections.

“The technicalities, financial compatibility, and other criteria should be taken into consideration and reviewed once again by the legal cell. Then the government can take a call on how far it can retain control, what modifications can be suggested to the original plan and whether this is agreeable to both parties,” Sreehari said.

When contacted, NICE had no official comment to make. People familiar with the development say NICE is not thrilled, as such an arrangement will mean giving away a portion of the revenues, something that will add to the impact of the slowdown and fluctuating raw material costs.

However, experts point out that the project has already suffered a two-year delay due to political backlash from the B.S. Yeddyurappa government, and NICE may have no option but to agree to the government’s overtures if it wants to avoid controversy and remain in the good books of the Bharatiya Janata Party-Janata Dal (Secular) coalition government.

This story appeared on Mint, as part of the content tie-up between CNBC-TV18 and WSJ Mint. Read the original here.