What do we do? From where do we raise money?
Reeling under a financial crisis, a group of developers who bought two plots from the DDA have defaulted on payment and requested the Union Urban Development Ministry (UDM) to bail them out by extending the deadline, reports Moushumi Das Gupta.delhi Updated: Jan 13, 2009 23:46 IST
The economic slowdown, it seems, has severely impacted one of the key projects linked to the 2010 Commonwealth Games—budget hotels.
Reeling under a financial crisis, a group of developers who bought two plots from the Delhi Development Authority (DDA) have defaulted on payment and requested the Union Urban Development Ministry (UDM) to bail them out by extending the deadline.
The plots are located in Dwarka Sector 13 and Paschim Vihar District Centre and were auctioned for Rs 252 crore and Rs 241 crore, respectively, to two companies — Tirupati Infra Projects and Divine Infracom. A five-star and a mid-segment hotel were proposed to come up on them.
The development comes as double whammy for the DDA, and the Games, because construction at 33 hotel sites auctioned by the authority in the last two years had anyway slowed down because of the meltdown.
The DDA has requested the ministry to extend the payment deadline. But till the nodcomes through, the developers have to stop construction at both sites. “Till the deadline is extended, the developer has to stop construction," said a DDA official who did not want to be quoted.
According to DDA auction rules, a successful bidder gets 180 days to make the full payment. If the ministry does extend the deadline, the DDA has the right to cancel the allotment.
The developers have pinned their hopes on the ministry. “What do we do? From where do we raise money? After the economic slowdown, even banks are not giving loans. At this rate, how are we going to complete the hotels in time for the Games,” said Subhas Dabas, whose group company, Tirupati Constructions, bought these two plots.
The same company has bought two other plots in Dwarka Sector 10 and Shahdara for Rs 211.11 crore and Rs 68.45 crore, respectively. "I don't think all the hotels earmarked for the Games would be completed on time," said Dabas.
This is not the first time that this company has defaulted on payment. Last year, they had to stop work for three months after they failed to make the full payment for the Dwarka Sector 10 plot. The ministry finally extended their deadline.
Senior DDA officials admit that work at most plots has been hit. The slow pace has alarmed hospitality sector experts. They say unless some miracle happens, it is well nigh impossible these hotels will be ready in time to accommodate tourists.
According to Tourism Ministry figures, Delhi and NCR will require 30,000 hotel rooms to accommodate the 7 lakh tourists expected for the Games. The 33 plots are expected to generate about 6,000 hotel rooms.