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Divestment of ITDC hits roadblock

Gaurav Raghuvanshi

The divestment of four India Tourism Development Corporation hotels is likely to be pushed back by six months due to the political wrangling.

The ministry of divestment needs concurrence of the state governments because these properties -- the Ashok hotels at Jaipur, Ranchi, Pondicherry, Bhopal, Itanagar, besides Neelanchal Ashok (Puri) and Bramhaputra Ashok (Guwahati) -- are in the joint sector, with the land provided by the state governments on a long-term lease.

While the Rajasthan government had demanded that the lease term for the Jaipur Ashok be brought down to 30 years from 99 years, the Assam, Madhya Pradesh and Arunachal Pradesh governments had not even responded, a divestment ministry official said.

The divestment ministry felt that any change in the terms and conditions at this stage would put off the bidders, he said.

"All homework has been done, but these states are not sending across their approvals," he said.

As per the government schedule, the properties in third tranche were to be sold by end of May. Divestment of these four properties would now drag for at least six more months, the official said.

On the remaining 10 hotels, including two Hotel Corporation of India properties and one of the ITDC properties under construction at Chandigarh, the official said the ministry would be able to complete their divestment on schedule.

The process of due diligence in the five hotels in the fourth tranche would start in a couple of days, he added.

The government had also decided to go ahead with the same adviser, Lazard Capital India Ltd, for the properties in which rebidding was done due to poor response from the bidders, the official said.

The hotels for which fresh bids had been called include the twin towers of Indraprastha and Kanishka and Ranjit in New Delhi and the property at Manali, which has attracted over 30 bids.

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