Three days after Hotel Taj Mansingh's 33-yearold lease expired on October 10, 2011, the NDMC council held a special meeting to extend the contract for a year. NDMC officials say this decision was taken since the process of inviting open bids is lengthy. "We have decided to rope in IDFC as the financial advisor to help us select a partner to operate the hotel. The details will be worked out soon,'' said Archna Arora, chairperson, NDMC.
Sources say months before the UD ministry suggestion to invite open bids, the civic agency decided to initiate the process of renewing the contract with IHCL on "mutually agreed terms" as per a report in ET.
"The minimum licence fee for the first 10 years was set at Rs 21 crore and the IHCL was expected to pay 17.25% of its gross turnover annually to NDMC in the first 10 years. For next 10 years, the terms were 18.25% of gross turnover with Rs 25 crore as minimum licence fee. And in the last 10 years, IHC was to pay 19.25% of its gross turnover with Rs 30 crore as minimum licence fee,'' said an NDMC official.
At present, NDMC gets 10.5% of the gross receipts (minimum of Rs 20 crore) or 15% of NDMC's investment in the hotel building (it was Rs 6.26 crore), whichever is higher, along with Rs 12 lakh as house tax and a ground rent of Rs 2.29 lakh per annum. Over the years, it is learnt, NDMC has earned Rs 220 crore from the hotel.
Sources said NDMC is not bound by the UD ministry's advice on initiating an open bid. "If the NDMC council decides to renew the contract with IHCL, it can do it. UD ministry's letter is just a suggestion," said an NDMC official.
If an open bid is invited for Taj Mansingh, sources said, a similar process would have to be followed for other NDMC properties, especially hotels. There are four other hotels - Bharat Hotel (Lalit), Hotel Connaught , Le Meridien and Metropolitan Hotel - on lease with NDMC getting a share of the gross turnover.
"When the Union urban development ministry had asked them to invite open bid, then why did they extend the lease? The decision was taken in August and NDMC extended the lease in October. They had three months to find an advisor and start the open bid. This is being done to favour one company,'' said Karan Singh Tanwar, BJP MLA and a member of NDMC council, who had protested against the proposal to extend the lease.
Sources in the Taj Group said the company was keen to retain the property. "IHCL has sought an extension of the collaboration agreement and license deed between NDMC and IHCL in respect of the Taj Mahal Hotel on Mansingh Road. IHCL has enjoyed a very cordial and mutually beneficial business association with NDMC over the past three decades. We look forward to continuing this relationship," a source said.