Lease or auction? NDMC to decide on Taj Mansingh

A month before the one-year extension of lease for The Taj Mahal Hotel on Mansingh Road runs out,the private consultant hired by the New Delhi Municipal Council has submitted its final report.

Written by Pragya Kaushika | New Delhi | Published:September 14, 2012 12:55 am

A month before the one-year extension of lease for The Taj Mahal Hotel on Mansingh Road runs out,the private consultant hired by the New Delhi Municipal Council (NDMC) has submitted its final report.

The Ernst & Young report is said to have listed the pros and cons of both an open auction for the property and extension of lease with the company.

The Taj Mahal Hotel,popularly known as Taj Mansingh,was constructed to house delegates of the Pacific Area Travel Association conference in 1978. The hotel was considered a unique joint venture between NDMC and Indian Hotels Company Limited (IHCL).

Land and construction cost was borne by the NDMC while the IHCL,which procured movable assets,was responsible for operations and maintenance of the hotel. The lease period was for 33 years,which ended on October 10 last year. The IHCL was given a one-year lease extension,though the Urban Development ministry had approved an auction.

A senior NDMC official said the final report will be placed before the council for approval.

“The Ernst & Young report gives a detailed data analysis and compares the cost of both the options — auction or extension — and also a few other options the consultants have cited. We had certain queries that they have satisfied. Now,we hope to come up with the report before the council for a decision,” the official said.

According to the original agreement,the IHCL latter would have first right of refusal in case of an open auction.

“The existing operator will be asked to match the price of the highest bidder in accordance with the right of first refusal. If it disagrees,the highest bidder will get the deal,” the official said.

For the one-year extension granted to IHCL,the civic agency is expected to charge 17.5 per cent of the gross turnover — Rs 21 crore — for the period. This was approved by the NDMC last month. Under the previous agreement,from October 1978 to October 2011,the hotel was paying 10.5 per cent of its gross turnover to NDMC.

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