Golden Chance: The winning bidders will get to market 40 million sq.ft of property (Bloomberg)

Unaware of the postponement, a representative of a Delhi-based consortium of builders landed in Mumbai with an earnest money draft of Rs 18 crore, but had to return. The official reason for the postponement was that the notification validating the 300-sq. ft homes that local Dharavi residents were to receive in the DRP, had not been issued by the government. Currently, builders have to provide rehab units of 225 sq. ft carpet area in slum projects.

The global meltdown does not seem to have dented the interest in DRP. Of the 19 pre-qualification bids that came in June 2008, as many as 14 evinced interest to participate in the final round. Though the premiums expected in 2008 may have eroded, the list of bidders is a who’s who of the construction industry, such as Allied Real Estate of Bulgaria, a joint venture of Indiabulls and US’s Shia Homes, Runwal Group with Capital Land of Singapore, Emaar-MGF along with Dubai’s Expanse Constructions, a joint venture of Neptune Developers with Pacifica of US, and a Lanco-Sunray City (South Africa) alliance. The one big player that has opted out is HDIL that had a joint venture with Lehman Brothers — the latter went bust.

The interest in Dharavi is because it is not just slum redevelopment. It is a massive seven-year, Rs 16,000-crore realty project. The 14 bidders are competing for developing Dharavi in five blocks spread over 593 acres and positioned cheek-by-jowl to Mumbai’s business district, the Bandra Kurla Complex. The winning bidders are required to construct 30 million sq. ft of residential space to rehabilitate 60,000 slum dwellers. In return, the builders will be permitted to construct and sell 40 million sq. ft of commercial and residential realty.

What is the real reason for the bidding process, fixed twice — on 20 July and 30 July, to be postponed? Senior bureaucrats say Dharavi is a casualty of the skirmishes within the ruling Congress Party. They say that former chief minister Vilasrao Deshmukh and strongman Narayan Rane’s supporters do not want the credit for the scheme to go to the current incumbent Ashok Chavan.

Chatterjee says the market will improve by the time the bidding process resumes. However, the foreign partners bringing in the money may lose interest by then.

The pitch has been queered further by an expert committee on DRP, headed by D.M. Sukthankar, former Maharashtra chief secretary, raising doubts on serious planning issues. “Granting land to builders for the highest premium is nothing short of land grab. Developers will get control of 53 per cent of Dharavi’s land, whereas the people will be squeezed into 47 per cent area,” says architect Neera Adharkar, a member of the committee.

Chatterjee is hopeful the bidding process will resume in October after Maharashtra’s assembly elections. But no one knows in which direction the derailed project will move, if at all.

(Businessworld Issue Dated 18-24 Aug 2009)