CAIRO: Egypt’s Prime Minister said on Thursday the government would reallocate the land for Talaat Moustafa’s Madinaty project back to the firm after a court ruled the state land sale contract should be scrapped.
The cabinet spokesman also said a group of ministers was drawing up details of the arrangement for final approval by the cabinet on Sunday.
"The ministers of finance, housing and legal affairs are sitting to give us the form of the solution in detail to be discussed in the cabinet meeting on Sunday to be approved," the spokesman, Magdy Rady, told Reuters.
Egypt’s government sold land to TMG, the country’s biggest listed developer, for its estimated $3 billion Madinaty project in 2005. But a court ruled in June the contract was illegal because the land was not put up for public auction.
A higher court upheld the decision last week, sending the firm’s shares crashing 16 percent in three sessions. The government has since come under pressure from investors in TMG to find a resolution to the row.
A state-appointed legal committee said on Wednesday that the government could reassign the land to TMG after scrapping the original contract because it was in the public interest.
Building has already started on Madinaty, which is meant to include shops, hotels, homes, schools and a golf course. The plot makes up about two thirds of TMG’s land and its shares slumped 16 percent in the three days after the ruling last week.
Rady said the group of ministers were aiming to organize the formal cancellation of the contract, the return of the land and the signing of a new contract reallocating the land to the firm in the same session.
Shares in the firm were up 1.6 percent by 0922 GMT, a little ahead of Egypt’s main benchmark index.
"The recommendations proposed satisfy all parties, while respecting the rule of law and avoiding the negative implications that could have come if any harm was done to the project," Abdel Raheim Nafae, head of the committee, told Egyptian television.
The committee based its recommendation on an article in the disputed law that allows the government to sell land directly if it is in the public good.
"Maintaining the legal statuses of all parties in the Madinaty contract is a matter that must be approached with caution, because there is no doubt it is within the public interest," the committee said in a report.
The committee said the land should be returned to TMG if the project is proven to be of benefit to society and the economy.