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India plans to confiscate Emaar-MGF's bank guarantee

India's housing agency has found irregularities in the construction of the Commonwealth Games Village by private real estate developer Emaar-MGF and is expected to take action against it

  • By Ajay Jha, Chief Correspondent
  • Published: 17:49 October 20, 2010

Commonwealth Games Village
  • Image Credit: Rex Features
  • Commonwealth Games Village during its opening

New Delhi/Dubai: Dubai-based construction company Emaar and its Indian associate MGF may have to forfeit Rs1.83 billion (approximately Dh175 million) for doing a shoddy work in construction of the Commonwealth Games Village.

The federal Urban Development Ministry has instructed the Delhi Development Authority (DDA) to confiscate Rs1.83 billion that the construction company Emaar-MGF had given in the form of the bank guarantee when the project was awarded to it.

However, the developer said in a statement sent to Gulf News that the bank guarantee (BG) was extended till December 31, 2010, at the behest of DDA and that it had “not received any notice for encashment of the BG”.

The decision to penalise the construction company came a day after the DDA submitted its report its report to the ministry on Tuesday, accusing the company of project delay and doing a shoddy work. “Emaar is being penalized for structural defects, and inadequate amenities including insufficient power and waste supply in the games village,” a senior official in the Urban Development Ministry said.

Urban Development Minister S. Jaipal Reddy had instructed DDA give him a report on the games villages on October 7, while the games were in progress in wake of variety of complaints by visiting athletes about inadequate facilities in the apartments allotted to them.

Emaar-MGF had constructed 1,168 apartments in the games villages that was used to house nearly 7,000 delegates from 71 participating countries. The Games village cost Rs10 billion, of which Rs7 billion was provided by the DDA last year in lieu of 300 apartments that DDA is now supposed to sell to recover the money after the construction company complained of lack of liquidity due to global recession.

Reacting to the reports, Emaar said in the statement: “The bank guarantee was extended till December 31, 2010, at the behest of DDA. It is incorrectly being reported in the media that the BG has been ‘confiscated’. We have not received any notice for encashment of the BG as well.”

The statement added that “the Games Village has been built to the highest standards of quality and design. The Village was handed over to the DDA and the Organizing Committee after a full inventory of facilities / items / assets in June 2010. The Village was fully put to use during the recently concluded Commonwealth Games. The Village received rave reviews from all participants who stayed there. All deficiencies pointed out by DDA or any other agency were duly rectified by us. If there are any pending items that need rectification, they shall also be done after the Village is handed over back to us by the OC [Commonwealth Games Organising Committee] and the DDA. No dues are outstanding to any government agencies including the Delhi Jal Board & BSES.

“It is pertinent to note that all the project milestones were achieved as per our scope of work. We would like to clarify that DDA purchased 333 apartments at a much lower rate compared to the existing market price at which Emaar MGF was selling. We are yet to receive the full payment of the same. Additionally, we had also offered the DDA an option to buy back the apartments sold to them.”

The 1,168 flats in the village were constructed at a cost of over Rs1,000 crore (approximately Dh900 million). The work to maintain cleanliness in the village continued even after athletes and delegates started arriving for the Games.

The DDA comes under the ministry and is under the direct administrative control of the lieutenant governor of the national capital. “The ministry will soon direct the housing body on the issue after examining it. Then the DDA can take action against the private builder,” sources were quoted as telling the Times of India.

Delhi chief minister Sheila Dikshit had openly blamed the Emaar-MGF, DDA and the Organising Committee for the shabby workmanship at the village.

Reaction: Date extended

Emaar MGF Land said yesterday the Rs1.89 billion bank guarantee was extended until December 31 “at the behest of the Delhi Development Authority (DDA)” and the company has “not received any notice for encashment” of the guarantee.

“It is incorrectly being reported in the media that the [bank guarantee] has been ‘confiscated’,” an Emaar MGF spokesperson told Gulf News.

“The games village has been built to the highest standards of quality and design. The village was handed over to the DDA and the organising committee after a full inventory of facilities, items, assets in June 2010.

“The village received rave reviews from all participants who stayed there. All deficiencies pointed out by DDA or any other agency were duly rectified by us. If there are any pending items that need rectification, they shall also be done after the village is handed over back to us,” the spokesperson said.

Emaar said “no dues are outstanding to any government agencies including the Delhi Jal Board and BSES”.

— With inputs from Nicole Walter, Senior Reporter

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