The Andhra Pradesh government issued an order today cancelling the agreement it executed with Moser Baer Infrastructure Developers Limited for setting up a crystalline-based solar cells and thin film solar cells facility on the outskirts of Hyderabad.

The State government and Moser Baer signed the Memorandum of Understanding (MoU) on April 16, 2008, under which the latter was supposed to set up manufacturing facility at the proposed Fab City Special Economic Zone for solid state memory devices like USB drives and flash cards in the first phase with an investment of $ 200 million within 24 months.

Under the second phase, Moser Baer was supposed to set up semi-conductor optical storage media, photovoltaic, thin film technology and nano technology units with an additional investment of $ 300 million within 36 months.

The company was also supposed to provide direct and indirect employment to 2,000 persons during the period.

“The company is not willing to take up the project in the agreed terms and also failed in implementation of the project within the stipulated time. Hence, the government hereby cancels the MoU executed with Moser Baer,” Principal Secretary (Industries) B Sam Bob said in an order today.

The State government had in January this year cancelled allotment of 100 acres of land to Moser Baer in the Fab City as it failed to pay an earnest money deposit of Rs 1.5 crore against the lease premium of Rs 15 crore and also submit its concrete business proposal despite repeated reminders by the Andhra Pradesh Industrial Infrastructure Corporation.

Citing economic recession, Moser Baer sought modification of its obligations in the MoU with regard to investments in Phase-I and II and extension of the project deadlines by two and three years respectively for each phase.

The government, however, rejected Moser Baer’s request and cancelled the MoU.