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Bidders losing faith in Dharavi project over delay, cost escalation

Bidders losing faith in Dharavi project over delay, cost escalation
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First Published: Tue, Aug 04 2009. 10 40 PM IST

Resettlement wait: An aerial view of Dharavi, Mumbai. In March, five teams of developers walked out of the project, whose cost was pegged at Rs9,300 crore in 2007, citing delays, rising costs and the
Resettlement wait: An aerial view of Dharavi, Mumbai. In March, five teams of developers walked out of the project, whose cost was pegged at Rs9,300 crore in 2007, citing delays, rising costs and the
Updated: Tue, Aug 04 2009. 10 40 PM IST
Bangalore: The Maharashtra government’s decision to cancel financial bids for the Rs15,000 crore Dharavi slum makeover project last week has made bidders anxious about its prospects.
Resettlement wait: An aerial view of Dharavi, Mumbai. In March, five teams of developers walked out of the project, whose cost was pegged at Rs9,300 crore in 2007, citing delays, rising costs and the global downturn. Abhijit Bhatlekar / Mint
The project was conceived a decade ago to rehabilitate about 80,000 families in Dharavi, one of Asia’s biggest slums, but has faced several hurdles that are delaying the project. The bidding process was initiated in April 2008.
Following the latest deferment, top officials of the Dharavi project say some of the 14 firms in the fray to develop the settlement may be edgy because of the delays.
“This (the cancellation) has increased the risk quotient in the project because bidders are also losing confidence because we are not aware of what’s happening behind the scene,” said an executive with a Mumbai developer that has tied up with a foreign firm for the project. “Also, it is a long-term project and many are questioning its validity.”
He now sees any progress in the project only after the state assembly elections in October. None of the developers Mint spoke with for this story wanted to be identified for fear of hurting their prospects for the project.
Another executive with a realty firm said that while his company would wait and bid for the project despite the delays, it was concerned if its foreign partner’s interest would be sustained for long.
Five teams walked out of the project in March citing the delays and rising costs, in addition to the global downturn. The cost of the project was estimated at about Rs9,300 crore in 2007.
Housing Development and Infrastructure Ltd (HDIL) opted out after Lehman Brothers Holdings Inc., its partner for the project, went bankrupt. But HDIL also said it had lost faith in the project as it had become unviable because of the delays and cost escalations.
The latest cancellation of the bid followed a spate of disruptions including objections by an expert committee set up by the state government, political interference and delays in approving an amended development plan for the project.
The Maharashtra government says it will not resume the bidding for the project till it issues the final notification for the amended development control regulations, guidelines to develop the 535 acre shanty town. The officials, however, can’t say yet when that’s likely to happen.
“I don’t know how long it will take to issue the notification for Dharavi. But until we finish it, financial bids will not be invited even if there is a delay,” said Johny Joseph, chief secretary in the Maharashtra government.
The government is amending a couple of clauses in the regulations to give bigger, 300 sq. ft houses to the slum dwellers. The amended notification was expected to be ready by 30 July, before the bids were to be opened.
A top official with the Dharavi Development Authority said he is not sure now if the project is floating or sinking. “The notification has nothing to do with the bidding. It can always be finalized once the bidders are shortlisted,” he said on condition of anonymity.
Last week, the state government formed an evaluation committee, comprising four top government officials including Joseph and Gautam Chatterjee, chief executive, Dharavi Development Authority, to take a final call on the project’s proceedings.
The panel was formed after a state government-appointed expert committee of urban planners, architects and engineers, led by former state chief secretary D.M. Sukhthankar, complained to the chief minister that the project had become a “sophisticated land grab” and did not address the welfare of the families there.
Another stumbling block in the South-Central constituency of Dharavi is political interference. “No political party wants to disturb the vote bank of Dharavi and the slums around it and so nothing will happen before the elections,” said the Dharavi official.
The Shiv Sena, for example, has been demanding bigger houses and separate self-development rights for two sections in the settlement.
“If builders are given additional constructions rights by doubling the floor space index from 2.5 to 4, then why should not the people (in Dharavi) get 400 sq. ft homes instead of 300 sq. ft?” asked Muttu Thevar, a Shiv Sena leader at Dharavi.
madhurima.n@livemint.com
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First Published: Tue, Aug 04 2009. 10 40 PM IST