Thursday, December 2, 2010

Mihan Land Scam-Generous MADC grants Rs 990 cr land to Reatox in Rs 80 cr-Hitavada

Mihan Land Scam-Generous MADC grants Rs 990 cr land to Reatox in Rs 80 cr-Hitavada
By Manish Soni
MAHARASHTRA Airport Development Company (MADC), which is under fire for bestowing undue favours to M/s Reatox Builders and Developers, has again been caught on the wrong foot, this time for allotting to Reatox 45 acres of land whose market cost is close to Rs 990 crore, for a project worth only Rs 80 crore. In the process, the developer has been benefitted to the tune of Rs 910 crores. And as if this was not enough, the MADC, surprisingly, has also agreed to extend a loan of Rs 50 crore to the developer for execution of the project.
According to official documents, a tract of prime land, situated along Wardha Road at Mouza Khapri (Shankarpur Road) worth hundreds of crores of rupees, was given virtually free of cost to Reatox Builders for creating rehabilitation facilities for project-affected persons (PAPs) of Multimodal International Hub Airport at Nagpur (MIHAN) and Special Economic Zone (SEZ).
As per the bid invited by MADC, the bidder was to execute the work of rehabilitation which inter-alia included construction of social infrastructure like ITI, school, public health centre, talathi-gram panchayat office, samaj mandir, development of plots and construction of small houses of about 300 sq ft each for 680 PAPs. All these works have to be done by the successful bidder at his own cost. In return, for doing this work without any cost to MADC, the bidder was required to quote in how much land he would need for the multi-purpose project. Agrrment was that the MADC would pay for infrastructure like roads, water supply, sanitation, electricity, telecom.
Sources claim that the MADC has provided 45 acres of land for the purpose of development of residential or commercial development on a 99-year lease to the Reatox Builders. In addition, the MADC also provided 1.97 hectares of land outside the rehabilitation area for the purpose of development of residential or commercial development again on a 99-year lease, plus a 0.3 hectare land marked as commercial area for the purpose of construction of shops on a similar lease. The contractor, that is Reatox Builders, was expected to pay lease rent of Rs 41 per acre per annum in advance of the land given for 99 years. As per this clause, the developer was required to pay Rs 1804 per annum for the entire land and only Rs 1,78,596 in totality for land worth hundreds of crores.
Realty market experts claim that by a conservative estimate, the prevailing land rates along Shankarpur Road is around Rs 500 sq ft. Some other experts insist, it is upto Rs 750 per sq ft. Going by these rates, the MADC should have got at least Rs 22 crore for each acre of land, which would amount to a whopping Rs. 990 crores for the whole land admeasuring 45 acres. In reality, what Reatox is spending is only Rs. 80 crores.
As per the agreement, the developer was to complete the entire rehabilitation project within one year from the date of commencement (February 22, 2009, when Chief Minister Mr. Ashok Chavan had performed ‘bhumipujan’ of the project). Yet, even after a lapse of 22 months, the project is dragging on, well behind the point of completion. The project will need another three months at least of round-the-clock work to be complete.
Initially, the MADC had given Reatox a loan of Rs. 20 crores for rehab project. However, time-overrun also seems to have led to cost-overrun. In a letter to MADC on May 29, 2010, Reatox explained the reasons for delay: the compensatory 45 acres were under encroachment, and therefore could not be accepted as colateral for raising funds through banks. Then came the request: Give us additional Rs. 30 crores by way of extended loan limit. The developer also said reportedly that the delays encompass water and power supply schemes (that would take another 12 months to be completed). In turn, that would mean more delay in handing over the possession of residential flats of 300 sq ft each to 680 project affected persons. Continuing its complaining tone, Reatox asked the MADC to clear the encroachment within 7 days so that it could get going with the works.
It may be mentioned that as per agreement, the MADC agreed to give advance to the extent of Rs 20 crore at 12 per cent per annum interest rate on monthly basis. However, the board of directors of MADC has sanctioned Rs 50 crore citing various reasons like project cost increase and inflation which affected the project. The MADC resolved in the board of directors that even though the bid document provided grant of a clean advance of Rs 20 crore to the bidder, advance has been granted against actual rehabilitation work done at the site as certified by Project Management Consultant (PMC)

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