Emaar to get Rs700 crore from DDA for C'wealth games village

12 May 2009

Ending weeks of uncertainty, the Delhi Development Authority has finalised a bailout formula for the cash-strapped Commonwealth Games Village project. DDA has announced a Rs700-crore bailout package for Emaar MGF, which is contracted to develop the games village. A part of the fund, which will be given in instalments based on stages of completion of the project, will be handed over immediately.

The project had got mired because Emaar was unable to raise the required financing in the prevailing recessionary conditions. Rather than a direct loan, the bailout involves the purchase of 333 flats by the land development authority in the CGV project.

The price at which the flats will be bought is 13 per cent higher than what was recommended by an expert committee constituted by the government to decide the modalities of bailing out the Indian unit of Dubai-based Emaar. However, the overall package is below the Rs100 crore that Emaar was seeking.

DDA spokesperson Neemo Dhar maintained that the fund should not be seen as a loan, but as a price paid for the flats, which DDA would sell later, along with the flats that were to be handed over to the agency as a part of the original agreement.

Dhar said, "Out of the 1100 flats that are to be built, two-thirds were to be handed over to us after completion. Now, the 333 flats will form an additional part of the number which will be coming to DDA.''

The funds infusion means Emaar MGF can finally proceed with the massive project, which has drawn criticism on grounds of viability as well as unacceptably slow progress. When tenders were floated for the project, the company had signed the deal at Rs435 crore for the land alone. The deal envisaged that Emaar would pre-sell its share of flats at market rates to raise funds.