- Plan is to monetize assets to meet disinvestment target
- A feasibility report prepared before covid had said the govt could get ₹7,500 cr by monetizing ITDC assets
The Union government has decided to lease out The Ashok hotel in central Delhi and the adjacent 22-acre land for developing a market complex and service apartments as part of its plan to monetize assets to meet its disinvestment target for the current financial year.
However, Ashok Hotel Samrat will continue to be run by the India Tourism Development Corp. (ITDC) for security reasons as it is close to the prime minister’s residence.
“An inter-ministerial group headed by DIPAM secretary cleared the proposal last month. It will now go to the core group on disinvestment headed by the cabinet secretary and then needs to be cleared by the Cabinet Committee on Economic Affairs,” a finance ministry official said on condition of anonymity.
The Department of Investment and Public Asset Management (DIPAM) had earlier this year commissioned a feasibility report from Feedback Infra, an infrastructure services company.
The report said that the government could garner around ₹7,500 crore from monetizing the two hotels.
The official cited above, however, said the government has not kept any divestment target for the hotels. “The report is based on assessment before the outbreak of covid-19. In current times, who can guarantee how much it will fetch,” the official said.
According to the plan cleared by the interministerial group, the land adjoining The Ashok hotel will be allowed for commercial development, such as office complexes and serviced apartments, as per the Delhi master plan rules, and after security considerations due to their proximity to the prime minister’s residence.
ITDC has shut most of its loss-making hotels across states and its balance sheet is now much cleaner, the official added.
It had recently closed Hotel Janpath in New Delhi and Jammu Ashok in Jammu. Currently, it runs The Ashok and Hotel Samrat in New Delhi and Kalinga Ashok in Bhubaneshwar. The Jammu and Bhubaneswar Ashok hotels made losses of ₹28 crore and ₹12.2 crore, respectively, in FY19.
“Some of the reasons for incurring losses include, inter alia, the wage structure of ITDC employees, which are higher than industry norms, non-refurbishment and renovation due to ongoing disinvestment process and competition from other modern hotels,” tourism minister Prahlad Singh Patel had said in the Lok Sabha in February in response to a query.
The government has set a disinvestment target of ₹2.1 trillion for FY21, including the privatization of Air India and BPCL. It is, however, yet to carry out any disinvestments so far this fiscal year. It had also missed the disinvestment target of ₹65,000 crore for FY20 by ₹14,701 crore. more
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