New Delhi: The Commonwealth Games Village in Delhi is unlikely to be completed on time because of alleged delays in payment by the developer, Emaar MGF Land Ltd.
Around 8,500 athletes and delegates are expected to descend on the city in October 2010 for a sporting extravaganza. But work at the village where they will be put up has fallen behind schedule, as at least half the workers employed at the site have walked away because they haven’t been paid wages by a cash-strapped civil contractor.
Shravan is one such worker. The 24-year-old is a migrant from the Ghaziapur district of Uttar Pradesh and gets a daily wage of Rs140. “I have not been paid for the last three months,” he says sitting at a tea kiosk near the huts built for the workers. “When we asked for payment, the contractors Ahluwalia told us that the developer owes them some Rs100 crore. That’s why they have not been able to pay us.”
Many other workers at the site also said that they have not been paid since December.
Ahluwalia Contracts India Pvt. Ltd, civil contractor for the project, admits it has not been receiving full payments from the developer, Emaar MGF, for the past five-six months. “Close to Rs85 crore of payment has been blocked,” says Arun Sahai, chief executive of Ahluwalia Contracts. “Emaar is paying us piecemeal. That’s how work has slowed down.” He, however, said that workers have been paid till January.
Emaar MGF denied in an email that it owes any payment to Ahluwalia.
The workers say they had even gone on strike on 4 March to demand payment. “Around 40-50 people in my department went on strike...we have been told we will get our dues soon, but I am not sure,” says Shravan. “I have a wife and child to support, and I cannot go on working like this without money.”
In June 2007, Emaar MGF, the joint venture between Dubai-based Emaar Properties PJSC and India’s MGF Developments Ltd, won the bid to build the Commonwealth Games Village over 118 acres near the Akshardham Temple in east Delhi. Emaar is building 1,168 flats at the village for athletes and delegates. These flats will later be sold to buyers in October-November 2011.
Emaar MGF is developing the project in partnership with the Delhi Development Authority (DDA), a government agency. Of the total flats built, Emaar MGF will sell 768 flats at market rates and the remaining will be sold by DDA after the games at lower prices. Emaar has priced the flats at over Rs2 crore. Unlike, most real estate developers who have cut prices because of the slowdown in the realty market, Emaar says it has no plan to reduce the prices of the flats.
A fair bit of work seemed to have been done at the site when this reporter visited it. The basic structure of all the 34 towers that are expected to come up on the site is ready. Finishing work was being done inside the towers, said Chakraborty, a project officer at the site who gave only one name. Around 60% of the work has been completed, he said. There were guards at the site and labourers were not being allowed to speak to Mint.
The number of workers at the site has come down drastically, as most have changed jobs because their wages have not been paid. “There were 7,000-8,000 workers at the site earlier, now we have around 2,000-2,500 workers,” says Sahai. “As things stand today, we really would not be in a position to comment on whether the project will get completed on time...funds have to come.”
According to Ahluwalia Contracts, it is spending Rs20-30 crore every month, but Emaar MGF has been paying it only Rs10-15 crore. “The deficit in payment has been growing and it has piled up to around Rs85 crore now,” says Sahai.
The fund squeeze has also affected Ahluwalia Contracts’ ability to procure raw materials such as cement.
The contractor, however, does not blame Emaar MGF alone for the delays in payments. “It is not their fault entirely,” Sahai says. “It is a known fact that the project is facing a financial crunch due to several factors...sales of flats has come down because of the pending court case against the project and the crash in the real estate market. Emaar has even approached DDA for funds, but nothing has been forthcoming so far.”
Emaar MGF was to fund the construction through the sale of flats. Bookings for the flats opened in 2008. The firm has so far sold around 260. Home sales in the Capital and its suburbs such as Noida, Greater Noida and Gurgaon are down almost 80% compared with a year-and-a-half back, according to real estate brokers. In December, Emaar MGF had written to DDA for a Rs300 crore loan. DDA is yet to decide on it. “All options are being explored,” Neemo Dhar, a DDA spokesperson says. “I cannot share the options since nothing has been decided yet.”
Meanwhile, work at the site has slowed. “Up to January, we were meeting all our milestones as stipulated,” Sahai says. “The project was going as per schedule and we would have completed by March 2010 had this payment issue not cropped up.”
“Development work at the Games village has been on schedule so far and we have recently achieved the third milestone in line with the project developer’s agreement signed with the DDA”, Emaar MGF said in its emailed statement.
Ahluwalia Contracts said though it has not been getting full payment for the past five-six months, it managed to pay workers till January by using its own funds. “We need funds urgently. Once work stops at the project, it will be very difficult to mobilize 7,000-8,000 workers again,” Sahai says.