the-project

Since 2007, at least 50 agreements have been signed between GIFT and several firms, but all of them have lapsed Gujarat’s bid to set up a global financial hub similar to Shanghai, Tokyo and London, projected as a dream project of chief minister Narendra Modi, continues to be wrapped in uncertainty. The `73,000 crore Gujarat International Finance Tec-City Co. Ltd (GIFT), a 50:50 joint venture between Infrastructure Leasing and Financial Services Ltd (IL&FS) and state-owned Gujarat Urban Development Co. Ltd (GUDC), is facing an acute liquidity crunch, with the the state government turning down a proposal seeking `2,000 crore. The company is now scouting for co-developers to develop infrastructure in GIFT, including power, a special economic zone (SEZ) and waste management projects, in a bid to raise money, said a senior official of the project who did not want to be named. GIFT will have India’s tallest building, a 400ft tall (100-storey) “diamond tower” in the centre, with 125 other buildings surrounding it, many of them over 100ft in height, located on the banks of the Sabarmati river in Gandhinagar, the state capital. The company was set up in 2007 and the city was to be commissioned in 2010, as per an announcement made in June 2007 by the state government and IL&FS in Ahmedabad, but there is no sign of this as yet. It promised to generate 300,000 direct and 600,000 indirect jobs in 10 years. The SEZ was to generate exports worth $1 billion (`4,660 crore today) in the first three years, increasing to $2 billion by the fifth year and $3 billion by the 10th year. “Housing and Urban Development Corp. Ltd (Hudco) has told us that they can consider a loan up to `1,000 crore but the absence of land transfer, which also hinders notification for our SEZ project, affects our plans for raising funds,” said a senior GIFT official. “It is difficult for the government to make budgetary allotment for a real estate project,” said a senior government official privy to the development. “The government did consider at one point of time to infuse funds as equity, which GIFT officials did not agree with then.” The state government is yet to transfer the land for the project, 650 acres, from GUDC to GIFT. The cost of the land is in the range of `500-650 crore and the government will not transfer this till it is satisfied with the progress of the project, said another government official. Since 2007, at least 50 agreements have been signed between GIFT and many firms, but all of them have lapsed and the project has not attracted any investment so far. It has spent at least `230 crore in 2008 and 2009, with 90% of the funds having gone to consultants associated with the project. Incidentally, a few IL&FS subsidiaries are consultants to the project. Except for some initial ground digging and levelling work this year, the project, originally planned to be showcased in the golden jubilee year that the state is currently celebrating, has not progressed. GIFT chairman Sudhir Mankad admitted that the financial proposal was not accepted by the government but is confident of raising funds from the market. “The (economic) slowdown has impacted our project in 2008. All the agreements have lapsed but we will sign fresh ones at an appropriate time,” Mankad said on the sidelines of a seminar on infrastructure in June. It has recently appointed Gandhinagar-based Institute of Seismological Research (ISR) for carrying out seismic surveys for the city. “I am a non-executive chairman and I also chair other companies. You should also speak to other officials who are involved in the day-to-day affairs for latest developments,” said Mankad, who retired as Gujarat’s chief secretary. R.K. Jha, chief executive officer of GIFT, declined to comment. “Currently, one may feel that GIFT has spent `230 crore but once the `20,000 crore building will be ready, one may realize its worth,” Mankad said. The state government has even earlier declined funds to GIFT. The state government had asked the company to prepare a road map and explain how it wants to use the money after GIFT sought `2,000 crore last year. The government turned down the proposal as it was not happy with the response from GIFT. Chief minister Modi has told GIFT officials in the past that there have been a lot of “glitzy” presentations on the project and he now wished to see something concrete. Aborting the project may not be easy. A clause in the agreement between IL&FS and the Gujarat government states that if the government does not approve any project report and if the project is affected as a result and not implemented, the state will have to compensate GIFT for the money spent. Source: http://www.livemint.com/2010/08/13212710/Gujarat8217s-dream-project.html?atype=tp Filed under: Builders/ Developers Tagged: Financial woes , Real Estate in Gujrat