Calcutta, Feb. 8: Private power utility CESC has bought three plots auctioned by the Calcutta Tramways Company (CTC) from its pool of surplus land, the first divestment by the Mamata Banerjee government.
The Sanjiv Goenka-owned company, which supplies electricity to Calcutta and Howrah, will pay Rs 27.73 crore for 49.16 cottahs spread over three tram depots at Galiff Street, Kalighat and Kidderpore.
A CESC official said the company planned to build substations to boost the distribution network in Calcutta and make power supply more reliable and efficient.
Industry observers said the land deal would give a fillip to the pro-industry image the state government has been zealously trying to build over the past few months.
“The CESC’s participation in the bidding process is a positive development. This will send a strong signal to investors. The bidding was done in a transparent manner,” said Debanjan Mandal, a partner in Fox & Mandal, the legal firm assisting the transport department with the auction.
Transport minister Madan Mitra today expressed satisfaction at the way the plots could be auctioned without any protest from CTC workers. KPMG, the consulting firm, was the transport department’s transaction adviser for the auction.
“We got around Rs 55 lakh a cottah. We believe this is possibly the best we could have got as the country’s infrastructure sector is going through a lean phase,” Mitra said. “We hope this deal will evince interest from other big players for the second round of bidding for three other plots in CTC depots.”
Sources said the transport department had initiated “pro-employee policies”, such as payment of dues, to insure against hurdles before the divestment programme.
“The chief minister had said the state-run transport companies had to be self-sufficient. But she said the employees couldn’t be deprived, either,” a source said.
In October last year, the CTC had decided to lease out for 99 years 373 cottahs lying idle with six tram depots, taking the first major step towards restructuring the ailing transport department firm.
According to the deal, a leaseholder will have the freedom to use the land according to its will, and will not need the government’s consent to sublet the plot. The developer can mortgage the land to a financial institution to raise loans.
An earlier round of auctioning of the CTC’s excess land had hit a speedbreaker when no company bid for the 31 cottahs at the Shyambazar depot, just one showed interest in the 52 cottahs at the Belgachhia depot, and only two in the Tollygunge depot’s 241 cottahs of unused land.
Sources said the government was considering a relaxation of the terms when these unsold plots go under the hammer again next month.
“Real estate developers have demanded that they be allowed to make payments in instalments. Now, the successful bidder has to pay 95 per cent of the bid amount within a month even though the CTC will transfer the land after six to eight months. Developers want to pay the entire amount only after they get possession of the land,” a source said.
A city-based developer said: “There should be financial incentives for developers looking to buy CTC land. Under the current system, the CTC has to be paid the money within a month but hands the land over after months.”
The CESC does not have any problem with such an arrangement as it does not plan to build the substations immediately.
“The CESC has a long-term plan of investing Rs 2,000 crore to strengthen the distribution network. We want more land. It (the auction) was a good opportunity although the plots came at a high cost,” an official said.