The New Delhi Municipal Council (NDMC) has started proceedings for auctioning the Taj Mansingh Hotel after the agency received an approval from the Union Home Ministry.
"The MHA has given us the verdict that the hotel needs to be auctioned. We will take up the issue formally with the council on March 20, when we have the meeting," said Jalaj Srivastava, chairman of NDMC.
The property owned by the council was given to Indian Hotels Company Limited (IHCL) on lease, which went on for 33 years. The formal lease had ended in 2011 after which IHCL had got six temporary extensions for the operation of Taj Mansingh.
The last extension was given on January 31 this year as NDMC could not hold an auction because of the model code of conduct in place during the assembly elections.
The extended lease agreement is due to end on March 31.
Sources from the agency said that NDMC was in favour of giving the right to refusal to IHCL, in case an auction was to be called. However, the home ministry argued against this, saying that this may attract lower bids.
The bidding process is likely to take six to eight months after NDMC initiates proceedings.
"Ernst and Young, the project consultants who were helping us with the bid management process, withdrew threw months ago. We lack ample resources and experience within our department for an auction process of this level and complexity," Srivastava said.
Srivastava said the process of selection of the bid process manager was likely to take three months, following which the auction would take place.