Up in the clouds, up for grabs?

If it was not for the high price that both the parties are paying today, it could have been billed as a typical government-sponsored Comedy of Terrors. Consider the following: Congress Chief Minister Virbhadra Singh, invigorated by the winds of liberalisation sweeping the country in the early ’90s, invites tenders to rebuild the prestigious Wildflower Hall, which had burned to cinder after a devastating winter fire in early 1993. Singh was determined to embrace economic reforms by forging strategic partnerships with the private sector. But the government of the day was still in the grip of socialist dogma, and could not let go completely. So, instead of looking for an outright sale of property, it opted for a joint venture.

Says Singh, who has since bowed out of office: ‘‘At that time, a jv was the best option in view of the government’s sentimental attachment to Wildflower Hall. After all, it was a prestigious, heritage property, but we were aware that if we wanted to turn the property into a professionally-run, luxurious hotel, the state tourism corporation was not the ideal option.’’

Things were going well — the Virbhadra Singh government invited tenders from professional hoteliers which included the Oberois, Taj, Holiday Inn and the infamous M/S Shoes. The Oberois, who already owned two luxury hotels in Shimla were the frontrunners.The company’s late patriarch, Rai Bahadur Oberoi began his career as a clerk in its now flagship hotel, The Cecil, in Shimla. Negotiations began, bids were invited and the Oberois signed an the agreement for a jv in 1995. A new company called Mashobra Resorts Ltd, was formed and the terms broadly specified that the ratio of ownership would be 65:35 (the larger chunk with the Oberois). The Chief Secretary of the state was nominated chairman and a hotel nominee was to be the managing director. By mid-1996 the property was handed over to the Oberois.

The Raj Kumar Dhumal led BJP government which replaced the Congress government did not wait too long to embark on Operation Dirt, a favourite pastime of every successive government that comes to power wherein they begin to ‘scrutinize deals’ signed by their predecessors. Within three months, Dhumal ordered the construction to stop as a fine for building a wall not in the plan. Says a hotel official: ‘‘The temporary wall was built to control landslides.”

Despite difficulties, the spanking new building with 87 rooms, was ready to open on March 30, 2001.What should have been the beginning of a roll to profit, turned into a road to lunacy.

First, the Dhumal government refused to register the remaining 60 rooms, which ultimately forced the Oberois to approach the High Court. Then, the Dhumal Government declared it wanted to revalue the land beyond Rs 7.5 crore and to convert the freehold to leasehold. The Oberois, naturally, turned the offers down. The government called its board members on March 6, 2002, and arbitrarily terminated the JV.

Next morning, government officials escorted by a police posse marched into the lobby to take over the hotel but intervention by the Company Law Board stopped the illegal takeover.

Two months later, Dhumal explains: ‘‘It is not the duty of state governments to run hotels but its interests must be safeguarded. Let us evaluate the property again and let the Oberois pay lease money for it. I think they are now coming around.’’ Chief Secretary Harsh Gupta clearly wants the government to pull out of the deal. Dhumal waves away his own accusations saying, ‘‘ Let’s look ahead…”

While the government is adamant in turning the Wildflower Hall land from freehold into a leasehold, the Oberois have proposed buying the shares held by the former at a price fixed by an international evaluator. ‘‘Outright sale is also a possibility,” says Gupta, ‘‘but there will be no third party.” The Oberois say this shows government’s fear of being exposed.

Says Biki Oberoi “We are not prepared to negotiate under pressure. First, they should remove all the roadblocks; give us the NOC and permission to open the remaining 60 rooms. It is a year since we opened and we are allowed to operate only 28 rooms. The revenue we are losing is mindboggling. They waited for us to open the hotel to begin the harassment, and thought we would capitulate under pressure. But we know we are right, we will continue to stick to our stand.”

As a bewildering array of people descend on this Queen of Hill Stations for the season, once reputed to be the haunt of both the philanderer and fortune-hunter, perhaps it is time for the government to shed its inhibitions and suspicions about private enterprise and take it to its logical end.