State rescue for Games project likely

Cash-starved EmaarMGF, the developer for the troubled Commonwealth Games project in Delhi, is likely to get a state-approved rescue package.

The Games are scheduled for next year and plagued by failing deadlines and other problems. The Delhi Development Authority, nodal agency for implementation, may announce the rescue package by next week, sources in the agency say.

The DDA is close to finalising a proposal which includes a Rs 300 crore (Rs 3 billion) soft loan to EmaarMGF. Alternatively, it might buy about 300 of the 1,168 apartments being built by Emaar at the Games Village site, to house the 8,500-odd athletes and those who accompany them.

The company had hoped to sell 70 per cent of these flats at a hefty price, using the cash to finance its construction. That original plan is in trouble.

The probable DDA plan is to buy 300 of the 768 apartments for sale at a negotiated rate, sources said, declining to elaborate. Another option is purchase of flats by state sector undertakings.

"We are closely looking at the request of the developer and want to ensure that the project is completed on time," said a DDA spokesperson.

EmaarMGF, under a private-public partnership with DDA, had won the contract to develop 1,168 flats. The contract allows the company to develop the village and sell 768 flats, possession to be given after the Games, in return for a hefty booking price.

Some of the flats are priced at Rs 2 crore (Rs 20 million) each.

But the ongoing global slowdown and falling stock markets has stalled the demand for these. As with many other Games-related projects, doubts are being raised on timely completion.

"We are in talks with DDA, our project partner, to explore various funding options for the Games Village. The work is on schedule and the third milestone according to the project development agreement has recently been achieved on time,'' an EmaarMGF spokesperson said.

DDA spokesperson confirms the project is on schedule, with almost 40 per cent of the work done. The project was to be completed by April 2010, a few months before the Games.

Earlier, Emaar had successfully rescheduled a related State Bank of India loan, on which repayment was to begin in September. The loan was negotiated in 2007.