Monday, October 3, 2011

Beach Properties: Andaman for Sale?

THE LIGHT OF ANDAMANS | ISSUE 14 | 30 SEPTEMBER 2011

Beach Properties: Andaman for Sale?

The orchestrated bidding process of 25 acres of prime beach property at Neil Island for just Rs 25 lakhs has raised many eyebrows. Although what eventually happened still remains a mystery, it has over and again proved that if the codal formalities are adhered to the dot, you can easily sell the country itself, provided you have two quotations.

By Zubair Ahmed

Once, a Pradhan of a Panchayat bought a wall clock for Rs 80,000/- Fortunately or unfortunately, he was prepared to face any enquiry as he had fulfilled all codal formalities. He had three quotations and the lowest was for Rs 80,000/- And there was no benchmark set!
The Andaman and Nicobar Administration floated the proposal to develop tourism facilities on BOT basis and three beach properties - Lalaji Bay (Long Island), Bharatpur (Neil Island), Hut Bay (Little Andaman) were put on bid.


Bids for all the three sites were received on 8th December 2009. Lalaji Bay attracted three bids (CGH Earth, Six Senses, Soma Group), Neil Island -   two bids (Soma group and Surya Samudra) and Hut Bay could only attract one bid (Surya Samudra).
All bids were opened on 26th February 2010 with Lalaji Bay going to CGH Earth for an annual fee of Rs 1.75 crore. The runner-up was Six Senses, who bid Rs 1.62 Crore and SOMA group were out of the race, who bid for just Rs 16 Lakhs.
Hut Bay with just a single bidder (Surya Samudra - Rs 5 lakhs) was eventually cancelled.
The successful bidder for 25 acres of Neil Island beach property was SOMA group, who got the property for just Rs 25 Lakhs ousting Surya Samudra, who bid for Rs 24 Lakhs.
Many questions remain unanswered as the whole process was well-orchestrated and leaves no loopholes. But, the ultimate loss to the public exchequer is estimated about Rs 300 crores in the whole process. Naturally, it was not an error or a slip up.
Questions are raised why bids were opened in New Delhi for the first time ever. Usually tourism bids have always been opened in front of the committee in Port Blair, as in the case of Taj bid in Havelock Island, and the relevant committee in Andaman was ignored and not present. Financial bid papers were previously left in custody of DRC in Delhi for one and a half months instead of bringing to Andaman as has been past practice. Moreover, bid price which was far below the market value was accepted. It is learnt that SOMA themselves had judged Long Island to be less valuable than Neil Island, having bid only Rs.16 Lakhs per annum on it. The plot at Long Island went at Rs.175 Lakhs per annum, so Neil Island should have been bid for at least Rs.200 lakhs per annum. 5 years prior, before tourism took off in Havelock and shortly after the tsunami, when prices were low, a plot at Havelock went to Taj for Rs.225 Lakhs per annum and this would have fetched much more now. Expected price for Neil Island plot on lease at market rates should have been well above Rs.200 Lakhs per annum i.e. approx 10 times less than price awarded.
It is also accused that the Benchmark Reserve Price was not met and was ignored while awarding. The Internal benchmark rates of Rs 33 lakhs  were set prior to bid opening. Although far below market rates but still above the final bid, the Internal Benchmark rates were ignored while awarding. Most importantly, the file notations from within the Administration were in favour of a re-tender because the bid price was too low and below the benchmark but the final decision went against the notations of the senior bureaucrat and the rest of the Administration.
There was a delay in signing lease beyond final date. As per tender terms, the bids were only valid for 180 days after bid due date, until August 2010. However, the lease was awarded in December 2010. Contrast this with the Long Island lease which was tendered together with Neil Island on a bid price of Rs.175 lakhs per annum and which was signed within the approved timeframe and signed many months before the Neil Island lease - the reason for the delay was due to the low price and the senior bureaucrat  insisted on a re-tender.
When the Hut Bay tender was cancelled for being less than 3 tenders, but Neil Island tender was through even though there were only two tenders. This unequal treatment has also raised many eyebrows.
It is alleged that there was a possible collusion between the bidders as Soma group won the bid for Rs 25 lakhs and the second party Surya Samudra had bid for Rs 24 lakhs. The owner of Surya Samudra is a Rajya Sabha MP and Soma Group is allegedly controlled by senior leaders of a national political party, ally in UPA with two realtors as the face of the company.
 It needs serious investigation how a prized and scarce asset of Andaman Tourism was "sold" at a very obvious undervalue for a 60 year lease.
This orchestrated favouritism will only help Soma group to monopolise leading to the death blow for private entrepreneurs and local businesses in Neil Island. The fact that Soma has been given such prime land so cheap at Neil Island means that local businessmen and hoteliers will find it impossible to compete with it. Any other resort will buy land at Rs.1 crore per acre, which is the minimum price of beach land at Neil Island, which means Rs.25 crore investment for a similar size plot to Soma - and they are paying just Rs.25 lakhs per annum for the same - 1% of current land value. Naturally, competition will suffer and Neil Island will experience lopsided and unfair development because of this action.
It is also learnt that the reason given to accept the low price was to develop Neil Island. This is despite the fact that there are already private resorts and a government tourist resort in Neil Island and many local entrepreneurs have upcoming projects already at Neil. In contrast, Little Andaman requires such intervention as LA does not have any private resort or government tourist guest houses and is in dire need of tourism investment to kickstart the economy.
When land is very scarce, especially for genuine needs of the Islands, such prime property has been let to slip out and who benefited from it will remain a mystery and why there is no uproar over such deals will keep hitting our conscience forever. On the one hand, tourism is hyped as the only potential industry, which can bring revenue to this Islands, prime lands are sold for throw away prices. just for selfish motives.

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