CAIRO - Egypt's government said on Sunday it had approved a legal committee's plan to resolve a land row around the country's biggest listed developer's flagship project, a dispute which has raised concerns across the sector.
The state said it would scrap the original contract for Talaat Moustafa Group's (TMG) (TMGH.CA: Quote) estimated $3 billion Madinaty project and reassign it to the firm by direct order.
A state-appointed legal committee issued recommendations last week saying the government could reassign the land to TMG after scrapping the first contract because it was in the public interest.
"The cabinet has approved implementing the recommendations of the legal committee formed by presidential decree," the cabinet said in a statement, adding that the original contract would be scrapped and land assigned back to the same firm.
"The new contract between NUCA (the Housing Ministry's New Urban Communities Authority) and Talaat Moustafa will be signed in accordance with the same articles and rules set by the original contract and in a manner not contradicting the rulings of the administrative court and the high administrative court," the statement said.
The government had previously said it was not seeking to charge the firm any more money under any new contract.
Cabinet spokesman Magdy Rady said no date for signing the new contract with TMG had been set.
Egypt's government sold land to TMG for Madinaty in 2005, but a court ruled in June the deal was illegal because the land was not publicly auctioned.
A higher court upheld the decision this month, sending the firm's shares plunging 16 percent in three sessions. The government has since come under pressure from investors in TMG to find a resolution to the row.
Rady earlier told reporters that the cabinet was reviewing establishing a new mechanism to manage land sales.
He said Prime Minister Ahmed Nazif sought a new framework "putting in place a clear time frame to take account of all land both used and unused, setting in place the necessary foundation for the allocation of land to the various sectors and pricing them transparently and in a coordinated fashion."
Rady said the review of land allocation would affect all sectors of the economy.
Alongside allocating state land to be sold for housing and business development, the government assigns land for a range of other uses, including agriculture, tourism and public services.
