Shimla, March 5
In a significant move, the Himachal Pradesh Government has decided to terminate the joint venture agreement with the Oberoi group in the Rs 100-crore-Wildflower hotel which has been constructed at Mashobra, near here, at the historic site of the residence of the British army chief, Lord Kitchner.
The decision is learnt to have been taken at a meeting of the Cabinet here last evening following the alleged violation of the agreement by the Oberois. The meeting of the Cabinet was presided over by the Chief Minister, Mr Prem Kumar Dhumal.
The hotel with 84-luxury rooms has been constructed as a joint venture of the Oberois and the HPTDC on the 102 bighas of picturesque location where the former was sometime ago running a hotel in the building of Lord Kitchner which got burnt. The palatial hotel has now been constructed in its place.
It is being alleged that the Oberois have violated the agreement which provided that the hotel resort will pay an annual amount of Rs 2 crore to the state government when the hotel became functional within six years.
The joint venture agreement was signed during the previous Congress regime and the project has remained controversial ever since the BJP-HVC combine government succeeded.
It is learnt that the state government might pay the equity of the Oberois in the hotel that has been constructed by setting up a company under the name of Mashobra Resorts and ask them to quit.
It is being alleged that the Oberoi group violated the agreement and tilted the scale of the equity in its favour virtually knocking out the HPTDC out of the project. While the agreed ratio of equity between the Oberois and the HPTDC was 65:35, respectively, on the original cost of Rs 40 crore, but the cost was escalated to Rs 99 crores as the Oberois invested more money. This resulted in reduction of the equity of the HPTDC to nearly 7 per cent as the market price of the land offered by the state government was evaluated at Rs 7.50 crore.
Sources
said the agreement provided that the property would be taken over by the state government in case the hotel did not become fully operational in six years. The HPTDC entered into the agreement in October 1995 and only 28 rooms out of a total 84 were operational. A separate appeal regarding this was pending in the court.
The Chief Minister, Mr Dhumal, has been accusing the previous Congress regime of having given the heritage property to the Oberois for a song. Two other leading hotel groups, Taj and Holiday Inn, were among those which were at that time in the race for constructing the hotel. The Oberoi group, which already has two luxury hotels here, was allowed to construct this third one.
He had recently said the state
government had rejected the move to reduce its equity in the prime property.
When contacted, the Chief Secretary, Mr Harsh Gupta, who is also Chairman of the Board of Directors of the resort, refused to give details of the Cabinet decisions and said the government would move ahead as per the legal advice.
On the other hand, Mr Raman Khanna a general manager of the Oberoi group, claimed that the matter regarding escalation of the cost of the project was discussed in three meetings of the board of directors of the Mashobra Resorts in which representatives of the state government were present. The government had made its intentions clear that it was not interested in investing any more money in the project and the Oberois were at liberty to invest the required amount, he said. The Oberois are also saying that the value of land offered by the state government was over assessed and it should be got reassessed by some independent evaluator.
