LESS than a week after the high administrative court ruled to annul the Talaat Mustafa Group (TMG)'s Madinaty project, the government came up with a new contract that would reallocate the land for the project to the group, under the same terms. The cabinet on Sunday said the step came in compliance with both lower and higher courts' decision that the original contract was illegal as the land was not allocated through a bidding process. The government said it would sign a deal handing the land back to TMG based on "its right to act in the national interest". Madinaty has been mired in a legal row since a court in June said the original contract on land for the scheme was illegal. According to statements by Housing Minister Ahmed El-Maghrabi, the government would not change terms for the revised deal stressing that New Urban Communities Authority (NUCA) will get the value of the lands in the form of seven per cent of the project's completed housing units, as in the original deal, on the condition that any new contract must not value the land at less than LE9.98 billion, around LE297 per metre. The new-old contract was welcomed by TMG Holding but raised many reservations by people who considered it a manoeuvre as the price of the land in contracts, the one finalised in 2005 and the new planned one, is the same. Essam Ali Abdel-Halim, lawyer, filed a lawsuit against the decision and Hamdi El-Fakharani, the engineer who filed the original suit against the Madinaty land deal threatened to appeal the government's decision. "The price of the land was never the problem; the problem with the contract was that it was acquired without holding a public auction. It was a procedural problem which the new contract solved," said a senior official in a real estate development company. He added that, "there is no sense expecting the government to change the price it agreed with TMG five years after concluding the deal as this would jeopardise the creditworthiness of any future agreement involving NUCA." The source's opinion is echoed by the statements of Minister of Housing Ahmed El-Maghrabi who added that the financial compensation for the Madinaty land is "more than fair as the land was priced in accordance with prices prevailing at the time of the contract at LE297 per metre." On its part, the firm said the project had incurred additional costs from connecting the development to the electricity and water grids. "Although seven per cent of the built-up area would be offered to the government in return for the land, the extra infrastructure costs associated with the development meant the government was receiving a bigger percentage of the project's value, about 16 per cent of the built-up area," said a statement published as full page ads in local newspapers. Shares of the group gained 14 per cent in the weekly period that started with President Hosni Mubarak's decision to form a neutral committee to solve Madinaty's problem, and ending on Tuesday when the court scrapped the death sentence imposed on the group's former chairman, Hisham Talaat Mustafa, replacing it with 15 years in prison.
