Real estate major DLF has finally exited the troubled Rs 33,000 crore public-private partnership (PPP) township project at Dankuni in Hooghly district of West Bengal.
The state government has paid back about Rs 266 crore to the developer after deducting Rs 5 crore as fee for work done on behalf of DLF, say informed sources.
Spread over 4,840 acres, the Dankuni township was hailed as one of the biggest PPP projects in the country. DLF paid Rs 271 crore to the state government in 2007 after it emerged as the highest bidder, leaving developers like Emaar-MGF, Suncity and Bengal Ambuja behind.
When asked if the company had got back Rs 266 crore from the government, a DLF spokesperson declined to comment. “We do not have anything to say on the matter,” the spokesperson said.
The project has run into trouble from both ends. The Kolkata Metropolitan Development Authority (KMDA), the implementing agency, has been unable to procure even a portion of the land, something it never anticipated. And in 2006, when the idea took shape, DLF was oblivious of the coming economic downturn and its impact on the real estate business.
“There was no clause in the agreement on implementing parties’ obligations if the KMDA fails to obtain land,” said sources.
Dankuni had been a site of simmering tension since panchayat elections last year, when several political outfits and farmers’ lobbies began an agitation over the low compensation being offered for land. While DLF had offered the government a price of Rs 56 lakh an acre, or around Rs 2,700 crore for development rights on the land over 999 years, the land procurement committee for the project offered farmers Rs 7 lakh an acre for fallow land, Rs 12 lakh for multi-crop land and Rs 14 lakh for homesteads. Naturally, this was rejected.
After these problems, DLF suggested that the scale of the project be cut, and offered to develop only 500 acres. But the KMDA’s Vision Document 2025 said 15 growth centres with industrial pockets, which included Dankuni, had to be developed across the state. DLF then asked the government to allow it to exit from the project.
“DLF requested the government to return the initial amount it had paid to the KMDA. The matter was then referred to the state cabinet, which took the decision to give back the money,” said sources.
The West Bengal government, which had stepped up efforts to hold back industrialists after the much-reported exit of Tata Motors’ Nano project, put the blame for the delay on the poor financial condition of DLF.
“DLF’s response has not been very encouraging in executing the project, probably because of the financial crisis. I don't think they will be able to execute the project,” Ashok Bhattacharya, minister for municipal affairs and urban development, had earlier told Business Standard.
It is understood that the state government is now keen on bringing in New Kolkata International Development (NKID), a special purpose vehicle promoted by the Salim group of Indonesia, among others, for the project. NKID is also a joint venture partner in the petroleum, chemicals and petrochemicals investment regions (PCPIR) project in nearby Nayachar.
