Govt sold hsg project below market rate
As reported by Nauzer Bharucha of TNN in timesofindia.indiatimes.com on 10 May 2008:
Govt sold hsg project below market rate-Mumbai-Cities-The Times of India
Govt sold hsg project below market rate
MUMBAI: A mega public housing project in Dindoshi, Goregaon (E), which could have fetched the state government an enormous profit, was instead sold to a builder through a tendering process for much less than the prevailing market rate about 18 months ago, it has now come to light.
Investigations by TOI have revealed that Shivshahi Punarvasan Prakalp Limited (SPPL), a state government undertaking, sold virtually readymade residential buildings comprising 889 flats, 181 parking slots and 16 commercial shops to Mantri Group for Rs 120 crore in 2006-end. Only the wiring, plumbing and painting works remained unfinished. ‘We were the highest bidders when SPPL called for tenders,'' said Sunil Mantri, chairman and managing director of Mantri Group.
Official sources said the eight buildings, designed by architect Hafeez Contractor and supervised by veteran structural engineer Shirish Patel's firm, were constructed by SPPL through a contractor at Rs 1,350 a sq ft. “Mantri got the entire 6.5-lakh- sq-ft project at the rate of just Rs 1,850 a sq ft,'' sources in the SPPL told this newspaper.
Property rates in Dindoshi have been in the range of Rs 5,000-6,000 a sq ft for over a year. “We are selling the flats in this project between Rs 5,000 to Rs 6,000 a sq ft,'' Mantri himself confirmed. The project is called Mantri Park.
When TOI asked an SPPL official why the undertaking let go an opportunity to make a good profit by marketing the flats itself at the prevailing market rates instead of selling the project to a builder so cheap, he said, “I agree. But the decision to call for bids from builders was taken at the highest level.''
What has raised eyebrows is the announcement on page 39 of the bid document, which categorically states that the “remaining financial bid documents will be destroyed as it is (unopened). No complaints/correspondences whatsoever in this regard will be entertained''.
The terms and conditions for the winning bidder have also been made simpler—the entire amount can be paid by the builder to SPPL in six instalments. “Mantri has so far paid three instalments amounting to Rs 48 crore of the
total Rs 120 crore,'' said S B Mhatre, SPPL's general manager (marketing).
Mhatre added that although the buildings were ready, the builder would still have to set up the infrastructure and carry out the unfinished work at his cost.
Interestingly, an RTI query filed by a public-spirited citizen, seeking details from the SPPL about the manner in which the tenders were called and the project was awarded, has been stonewalled by the undertaking for the past one year. Although SPPL's public information officer gave some basic details, he failed to divulge which builder finally bagged the project and the amount he paid for it.
Last week, the matter went into appeal before state RTI commissioner Suresh Joshi, who has now directed the SPPL to reveal all information pertaining to the case.
There were four bidders for the Dindoshi project—Nagarjuna Construction Company, Villayati Mittal, Silver Consortium and Mantri Group. Mittal and Silver Consortium were both disqualified because they did not meet certain tender conditions, leaving the field open to Mantri and Nagarjuna.
“SPPL should have called for fresh tenders instead of accepting such a low offer from Mantri. It should have also prepared a separate valuation report to find out the true worth of the entire property,'' said a builder, not wishing his identity to be revealed. “By destroying the bid documents of other bidders, SPPL has effectively destroyed proof of the amounts quoted by others,'' added sources.
Incidentally, the Dindoshi project has come up on land acquired by the Maharashtra Housing and Area Development Authority (Mhada) for public housing almost two decades ago from the F E Dinshaw Trust under the Urban Land Ceiling (Regulation) Act, which was repealed recently.
Part of the land was used to rehouse project-affected persons free of cost by the slum authority, while on the remaining portion, SPPL constructed these residential towers, which were to be sold at market rates.
SPPL was formed by the erstwhile Shiv Sena-BJP government a decade ago to boost the floundering slum rehabilitation scheme by giving loans to builders. A total of Rs 73 crore was disbursed as loans to 30 developers in 1999 during the saffron regime in the state. The Democratic Front government later stopped the loans once it came to power and appointed the S S Tinaikar committee to probe the manner in which these loans were arbitrarily disbursed to select builders.
Till date, SPPL has constructed 7,740 tenements for project-affected persons and 1,723 flats meant for sale in the open market. “If not for the interference of politicians, SPPL would be at least a Rs 2,000-crore company. Today, it is worth just a couple of hundred crores,'' said an official.