Mumbai, July 14: The Mumbai Metropolitan Region Development Authority (MMRDA) has received a poor response for its proposals to build three car parking areas and a luxury hotel in Mumbai. It received only four proposals for the three projects where tenders were called.

This includes three tenders to build a multi-storied car parking and a hotel at the Bandra-Kurla complex in north-west Mumbai. While no bids were received for construction of a two-level underground car parking and a shopping centre at Bandra-Kurla, Larsen and Toubro (L&T) was the only bidder for the multi-storied car parking project at Nariman Point in southern Mumbai.

The three parties which have bid for construction of a hotel and multi-storied parking lot at the Bandra-Kurla complex include the Oberoi hotel chain owners, Bharat Hotels and a consortium of L&T with the Taj hotel group.MMRDA is presently evaluating the `eligibility bids' after which financial bids of the selected parties will be opened. It is likely to take a final decision on the proposals by next month. Though L&T does not have any competitor for the project, its price bid has to be approved by MMRDA.

The projects had initially generated a good deal of interest from corporate houses and construction companies and the authorities sold over 100 bid documents for the three projects. MMRDA had, in fact, extended the deadline for submission of the bids on the request of the prospective bidders. It had also agreed to make significant changes in the proposals as demanded by the bidders in the pre-bid conference. MMRDA had even extended the lease period of these projects to 80 years from 30 years and construction period to four years instead of three as stated in the initial offer.

It had also agreed to sign the lease document at the time of granting the project. Initially, it was supposed to sign only an agreement to lease with the selected party before the actual lease agreement. The bidders, however, made this demand to facilitate financing of their project arguing that it was difficult to arrange finance without certainty of lease.

The condition of ground rent to be paid by the developer to MMRDA was also withdrawn to make the proposal attractive. In the original tender document, the developers were to pay one per cent of the premium from the fourth year of the project to the 10th year; two per cent from 11th to 20th year and three per cent from 21st to 30th year as the lease was only for 30 years.

While amending the offer, MMRDA not only withdrew the clause of ground rent but also extended the lease period.Industry sources explained away the poor response to the offers saying the projects were still not lucrative enough to earn sufficient returns. Returns on the fixed assets are very limited and financing real estate projects is also difficult, they stated.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.