Delayed delivery, incomplete projects and financial stress of developers and homebuyers — it has been the story of Noida real estate for the past few years. Amit Mohan Prasad, senior bureaucrat and chief executive officer of the Noida Authority, told Indian Express that the Authority has roped in banks, consultants and has also facilitated project settlement policy to help break the logjam and address the concerns of homebuyers. He also said that while the Authority is not taking up new mega projects, it has identified 193 small projects in Noida that will improve the life of residents. Edited excerpts:
What are the key areas you are focussing on?
Essentially, the focus is on four things — resolving the buyer-builder issue, paying dues of the farmers, take up small projects that address issues of residents and make their life better, and the fourth area is to improve the financial health of the Noida Authority and to work towards enhancing transparency and accountability of the authority. A lot of payments of farmers is due and we are paying it in a serial order based on when the land was acquired from a farmer.
You have been working towards facilitating meetings between developers and homebuyers. What has been the breakthrough so far?
We are facilitating meeting between developers and homebuyers and several such meetings have happened. We have found that the problem is complicated. On the one hand, the builders have financial issues and do not have the ability to complete the project and on the other hand, homebuyers have lost faith in the developer and, hence, are not willing to pay the outstanding balance to the developer for the project. So, we had to find a mechanism to ensure that whatever comes to the developer gets routed only for the project completion. So, we decided to rope in banks to facilitate loan to developers against the unsold stock and use the loan amount from banks to complete the incomplete stock and offer it to the buyers. The plan is that once the developer starts getting money from buyers, they can utilise it to complete the unsold stocks and this will reinstate the revenue stream for developers and break the logjam. Five builders have already come forward for this and they have had their meeting with banks and developers are at advance stage of discussions. We are hopeful that some of them may see light of the day. This offer stands for other developers, too.
We are also facilitating on our project settlement policy. Since many developers are not in a position to pay all the outstanding (to the Authority for clearances), we have proposed them to pay 25 per cent now and reschedule the remaining amount. We have done this for around 10 developers. Through this rescheduling, developers have been able to make payments and we have given them partial completion and now they can go ahead with offering possession and registration.
Any other formula that you are working on to ensure completion of projects?
We are meeting developers and asking them about their schedule to honour their commitment and they are submitting their schedule for completion of project with us. However, since we do not have the capacity to monitor the work, we decided to engage project-monitoring consultants for the same. We shortlisted 15 expression of interests (EoIs) out of the 22 submitted to us by consultants including those from E&Y, PwC and KPMG. While we had a presentation from them recently, we are in the process of forming request for proposal (RFPs) based on their proposal and suggestions and soon we will finalise three consultants to monitor developer’s work on our behalf.
How has Jaypee project been dealt with?
It has been dealt separately. While they said that they would make all efforts to complete the project over next two years or so, we offered them tower-based completion under which the Authority will not ask for the entire amount in one go and they can pay the Authority in parts as per the completion of towers. We arrived at a formula that if they want completion of two towers then they pay for that and they agreed to it. That is how this logjam was broken and they deposited money with us and filed for completion of 9 towers. As on Friday, we have granted completion for all 9 towers which have an aggregate of around 1,000 flats.
What has been the message from the state government?
This was the initiative of the Chief Minister and the industry minister, as they are extremely focussed on resolving this issue. They have given me a sort of mandate within the framework to find innovative solutions to resolve these issues and break the logjam. The elevated road project and the metro project were two flagship projects.
What are other projects that you are looking to take up in Noida?
Noida being an industrial town, we are focussing on industrial development. We have selected a new Sector-155 as the industrial sector and we will launch it in the first week of August. While the total area is around 50 hectares, 34 hectares will be for industrial use and there will be 112 plots with a mix of small, medium and large plots. All the land acquisition is complete for the same and this will also generate funds for us.
While we are not looking at a mega project, we have identified 193 small projects across Noida that will entail and overall cost of Rs 175 crore. These are small projects such as drain, sewer-related and park-related works that will improve the overall life of residents both across sectors and villages. Most of the approvals have been granted for the same. While one underpass takes Rs 50-60 crore to get completed, we can complete 50 small projects for the same amount and it will benefit and improve the life of residents.
How is the financial health of the Authority and what are you doing to improve it?
One of the big requirements of the Noida Authority currently is its financial stability as the financial health of the Authority is not very good. While big ambitious projects were taken up, the revenue generation was not commensurate with it and so cash reserves got depleted. The Authority had cash reserves but big expenditures have drained it. Even, slowdown in real estate has impacted the revenue flow. While the steps we are taking to break logjam of project completion and delivery will help in improving the financial health of the authority, we are also following up on dues that people owe to the authority. We are following and monitoring it closely as in some cases our tenants have not paid rents for several years and no one has followed.