Chandigarh set to invite bids for its modern terminal market

Even as the Chandigarh administration is all set to re-invite bids, in early November, for setting up a Modern Terminal Market...

Even as the Chandigarh administration is all set to re-invite bids, in early November, for setting up a Modern Terminal Market, officials in the Union Government and private players have expressed their doubts over the attractiveness of the project.

When bids were invited for the first time, around four companies were short-listed but due to steep licence fee only one participated in the bidding process. Later, the tender was cancelled. Now, the Chandigarh administration is all set to re-work the tender and call for new bids.

Officials from the ministry of agriculture though feel that the project may not take off as Chandigarh is not a producer of agricultural commodities and the produce has to come from other states. States may be concerned about the loss of revenue and the private operator may have to get into an agreement with other states to be able to operate, as such agreements are not a part of the tender.

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Moreover, the land being offered ‘is in a central location, the market value of which is very high’. According to sources, this high value and attractive location created various interest groups within the Chandigarh administration, which led to the introduction of the licence fee in August. “The administration wants to get revenue back from the use of the land,” said an official. Considering the high value of the land, the Central Government, which subsidises 49 per cent of the project cost, is reluctant to include the land cost in the subsidy.

The Chandigarh administration is demanding Rs 8-crore annual licence fee (aimed at generating revenue from the prime property) from the private players, which they feel is unviable.

“If the administration feels the need to generate revenue from the land, it should not make operation of the market an unviable proposition for us. Let them increase the area allotted for non-market uses from 14 to 20 per cent or more, then we will be able to afford the licence fee,” said a potential bidder on the condition of anonymity.

According to potential bidders, a viable revenue model must be suggested by the administration, either by reducing the licence fee, increase the non-market area, so that malls can be built, or increase the lease period to 100 years from the proposed 25 years. “Any viable model that the government suggests is welcome,” said one bidder.

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“Private players need assurance and support from the Government, otherwise they will not be willing to invest such huge amounts (Rs 50 to100 crore) into terminal markets,” said an official at the agriculture ministry.

With proposals being put forth for nearly 30 other sites around the country and six of them (Bhopal, Patna, Ludhiana, Hoshiarpur, Muktsar and Jalandhar) being in advanced stages of finalising the award of contracts, private players are losing interest in Chandigarh.

“Chandigarh was like an attractive girl with many suitors seeking her hand, as it was the first market to be proposed. But now, there are other attractive girls and we are not interested in Chandigarh at such a high price,” the bidder added.

What is a terminal market?

It is an exchange on which futures contracts or spot deals for commodities are traded