The New Delhi Municipal Council (NDMC) has received the go-ahead from the Union Home Ministry to auction the iconic Taj Mahal Hotel in New Delhi.
Colloquially referred to by the road on which the hotel is located, Taj Mansingh's current lease is due to expire on March 31, 2015.
Indian Hotels Company Limited (IHCL), which operates the property, will not get the first right of refusal. The Home Ministry has ordered an open auction, which is certain to attract global bidders, to get high prices for the landmark hotel.
"The Ministry of Home Affairs (MHA) has instructed us that the hotel should be auctioned. We will take up the issue formally on March 20, when we have the next council meeting," said Jalaj Srivastava, chairman of NDMC.
IHCL had earlier filed an injunction in the Delhi HC to get a stay on the proposed auction, claiming equity in the hotel property's construction.
While the land and property belongs to NDMC, IHCL had signed a 33-year lease agreement for managing the property. That lease expired in October 2011, after which auctioning of the property was due. However, there have been six lease extensions since then, the most recent awarded on January 31, to last till March 31.
“It will be decided in the council meeting about the period of the next extension. Another six month extension is likely since the bidding process will take at least 6-8 months,” said Srivastava.
He added that the process of selection of the bid process manager is likely to take three months, following which the auction will be taken up. The previous consultant for the project, Ernst and Young, had pulled out after its contract expired two months ago.
“Since NDMC doesn’t have the necessary experience to go for an auction process of this complexity alone, hand holding is required. So we have to hire new consultants to assist us in the process, for which we will invite bids first,” Srivastava said.
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