Today's Paper

Norms for joint venture with TNHB

T. Ramakrishnan

First project at

K.K. Nagar

Every proposal to be cleared by Cabinet

CHENNAI: The way is cleared for the Tamil Nadu Housing Board to launch joint venture projects, with the State government issuing guidelines for taking up public-private partnerships.

The first such project is to be implemented near ESI Hospital at K.K. Nagar in Chennai over an extent of about 3.3 acres of land. It will have about five lakh sq ft of built-up space. The board’s idea is to execute an integrated housing project which includes a shopping mall with multiplex, according to P. Rama Mohan Rao, Chairman-cum-Managing Director of the Board.

The guidelines issued by the Housing and Urban Development department in its June 2 order categorically stated that the Housing Board should be the appropriate body to decide on selecting a project; the specifications of the project and bid documents and evaluation criteria.

The project partner should be selected through a two-stage transparent tender process. The design should be based on a clear-cut exit strategy, with the Housing Board not being involved in a long-term partnership with the selected bidder. Equity partnership should be avoided.

The bidders should have taken up, in the last five years, similar projects with not less than 50 per cent of the built-up area and cost. Their net worth should be at least 150 per cent of the estimated cost of the proposed project. The evaluation of bids should be on a single parameter.

“Ideally, it should be in terms of money which the bidder is ready to give to the Board for getting the rights to take up the project. Any other performance parameter should be frozen in the bid document itself and should not be left as additional bidding parameter,” the order said.

Pointing out that the land value (based on market value or guideline value. whichever is higher) should be the minimum upset price to be kept in the bidding, the order mentioned that if the eligible bidder were also to supply built-up space to the Board, the area/quality of such space should be frozen in the bid document and should not be left to the bidding agency to cite as part of its bid. The exact quantum of built-up space, which the bidder may be asked to provide to the Board free of cost, may be fixed by the Board.

On selection of a successful bidder, the Board should send the proposal to the government for approval of the project and the bidder. As decided in a Cabinet meeting on June 2, 2007, each proposal should be placed before the Cabinet for approval, the order said.

Dr. Rao says his organisation will invite, in a day or two, an expression of interest from prospective bidders for the K.K. Nagar project. The selection process will be completed by the middle of August.

The Board’s idea is to adopt the route of joint venture for projects costing more than Rs. 50 crore.