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Govt holds divestment of ITDC's Samrat Hotel on security reason

Proximity of government-owned Samrat Hotel to the high security zone of the prime minister's residence has created hurdles in the divestment of this ITDC's luxury hotel.

This will not now figure in the list of ITDC hotels to be divested under the second tranche, for which price bids are being invited between January 19 to January 24.

When contacted, sources in the divestment ministry said that Samrat Hotel had been taken off the list for clearing some of the security issues, raised recently.

Clarifying that divestment of the hotel by way of lease rental was not dropped, they said that once the issues were examined and cleared by the divestment ministry in consultation with appropriate authorities, the government would go ahead with its earlier decision.

Samrat Hotel, whose top floors overlook Prime Minister Atal Bihari Vajpayee's residence, was part of the ten hotels listed for divestment under the second tranche as per the decision taken by Cabinet Committee on Divestment at its meeting on December 26.

Sources said security issues had been looked into earlier, but now that fresh issues have been raised the matter was being looked into.

Taking note of the poor response for many of ITDC and HCI (Hotel Corporation of India) hotels during the first round of bidding, CCD on December 26, changed the criteria for determining the rent and value wherein it cut down lease land rent from 6 per cent to 2 per cent payable by HCI to Airport Authority of India.

As per the decision of CCD, government was to sell eight hotels of ITDC and give two others on lease rental where 75 per cent valuation would be for land and the remaining 25 per cent for building.

Apart from lease rental, the government was to take a minimum guaranteed annual payment in the case of Hotel Ashoka and Samrat in Delhi for 30 year lease rental which would be increased by 30 per cent every ten years.

Stating that the government would get 16.5 per of turnover in case it was higher than MGAP, Divestment Minister Arun Shourie had said after the meeting of CCD, that there was no bidder for ITDC's flagship hotel Ashoka due to higher land rent at Rs 140 million annually sought in the first round.

Now 75 per cent of annual rental committed by new partners would be given to land and development aurhorities with 25 per cent would come in the kitty of ITDC.

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