The Kerala government and the Dubai Internet City (DIC) are likely to sign a Smart City agreement on Sep 5, officials in the state IT department said.

"Due to lack of time we have been speaking over the phone to DIC officials. It is now expected top DIC officials will arrive here. The exact date of their arrival will be known in a day or two," said an official about the project that will come up in Kochi.

Kerala Chief Minister Oommen Chandy is keen that the Rs.15 billion ($340 million) deal be signed in this state capital. He also wants it to be signed fast as local bodies polls are round the corner, and the model code of conduct would become applicable once the notification comes.

"Even though the initial project cost for the Smart City has been put at Rs.15 billion, we feel the actual investment will be more than that," said Chandy.

Reports indicate that a memorandum of understanding (MoU) would be signed first and the final agreement in three months. Once the MoU is inked, the state would have to get the mandatory clearance from the central government.

A preliminary deal was struck by visiting Dubai Internet City officials in April for the state government to hand over the existing Infopark at a cost of Rs.1.09 billion, 136 acres of land for Rs.2.64 million per acre and another 100 acres of land free of cost to build the Smart City.

But under the new terms, instead of handing over the 100 acres of land free, it would now be given on a 99-year lease. In case, the Dubai Internet City fails to create 33,000 new jobs in lieu of the 100 acres of land, the land would be taken back.

The state government had earlier said it would not promote any other IT park in Ernakulam district, but this was changed and the government would now only give DIC a "cooling period" and be free to promote similar parks too.