One step forward, two steps back. That?s what seems to be happening to the railway ministry?s budget hotel project. After awarding the contracts for constructing three budget hotels as recently as last month, the railway ministry is now planning to cancel the contracts for 20 such hotels it had signed in early 2007.
?There are a lot of contractual issues plaguing the previously bid out projects, which are not likely to be resolved,? an official source said adding, ?IRCTC may be asked to altogether cancel the contracts and put them up for re-bidding.? He said the ministry is of the view that it may be better to cancel the current contracts and bid out the projects anew, as the contracts will need to be redone.
Seven of the proposed 20 sites in cities like Chandigarh, Sealdah and Mumbai have become a part of the larger world-class station development programme, which is under the mandate of the rail land development authority. The budget hotels in these cities will now be bid out along with station modernisation, making the earlier contracts useless, the official said.
There are also issues of encumbrance of land, which have arisen, and IRCTC is examining certain clauses in the contracts regarding the transfer of ownership of the land that need to be resolved.
The contentious contracts were awarded by the IRCTC early last year under the first phase of the budget hotel programme, when it took up 30 such projects. These 20 contracts were awarded to three private companies. These include Zoom Royal Orchid Consortium, which bagged contracts to develop 11 hotels at New Jalpaiguri, Lalgarh (Bikaner), Tirupathi, Habibgunj, Pune and Udaipur. The Essel Group will build five such hotels while four contracts were awarded to the Signet Group.
But since then, the budget hotel project or the Rail Ratna programme, has been mired in a series of controversies. A turf war erupted in the railway ministry as to whether the IRCTC or the RLDA would be responsible for the project. Official sources said the project now lies squarely under the domain of the IRCTC although those that are a part of the world class station programmes would be handled by the RLDA.
As a result of this confusion, the bidding process also came to a halt and the contract for only one hotel was awarded by IRCTC in July 2007.
In fact the contracts for 10 hotel sites was also delayed because of this. The railway ministry, through the IRCTC, plans to develop 100 budget hotels throughout the country by roping in private players. While the ministry would provide its vacant land near railway stations or the Rail Yatri Niwas buildings, private players would build and operate the hotels.