“In a different market, there would not have been any fears,” said MHADA vice-president and CEO, Gautam Chatterjee, also officer on special duty for the Dharavi Redevelopment Project, admitting that the liquidity crisis has led to several queries and requests for some sweetening of the proposed deal from the bidders.

“The bidders have expressed reservations on some of the conditions ¿ for example, a bank guarantee for 10 per cent of the project cost and an upfront payment of 10 per cent of the premium amount they quote,” Chatterjee said.

For now, he said, officials have advised each of the 19 consortia to remain active participants in the process and present their design masterplans to government officials and an expert committee next month, regardless of whether they choose to place a financial bid later.

Needless to say, when the project moves into the financial bidding phase, there would be stiff negotiations on the conditions, which now weigh severely against the builders. “With the total project cost now estimated at Rs 15,000 crore, ten per cent of the project cost for each of the five sectors is about Rs 300 crore. Who will raise that sort of credit now?” asks a representative for one of the firms in the fray. “Then there is the cost of building not just the commercial spaces, apartment blocks and the tenements for rehabilitating existing slumdwellers, but also developing schools, hospitals, fire stations, etc.”

The Dharavi Redevelopment Project aims to rehouse approximately 57,000 slum families in free homes, to be built by investing real estate developers who then exploit the special FSI of 4 for commercial development.

These and other concerns will have to be looked into carefully, Chatterjee said.

The government has also imposed a mandatory community development wing for the winning consortia, to undertake the most challenging task of entering into individual agreements with the 57,000 families eligible for rehousing and shifting them into transit accommodation before demolishing their homes.

The minimum premium bidders must quote has been fixed at Rs 450 per sq ft of built-up area. That translates into a few hundred crores per sector to be channeled into government coffers, considerably lower than the earlier expected total premium of several thousand crores. But that bidders will quote rock bottom prices, for now, is the least of the worries on the ambitious project to transform Asia’s largest shantytown.

The plush project
The Rs 15,000-cr Dharavi Redevelopment Project hopes to rehouse eligible slumdwellers in 300-sq foot flats. Commercial and industrial unit owners get the same 300 sq ft area free, but can buy excess area at cost price. While it may not have been the government’s intention, the project was also seen as a money-spinner with bidders to be selected on the basis of a premium amount they offer to pay the government.

According to the plan, winning builders are also to develop world-class amenities worth nearly Rs 2,000 crore, including hospitals, schools and parks.