The government is expected to earn roughly Rs7,000-Rs12,000 crore from the project, while the successful developers are expected to make a windfall of up to Rs25,000 crore after completing the project.

The government has drastically reduced the security deposit and performance security the successful bidders will have to pay. The financial bid conditions earlier said the successful bidders will have to pay 1% of the project cost as security deposit and 10% of the project cost as performance security.

But, as per the reworked master plan, the project cost will be calculated by taking into account the costs of rehabilitation, infrastructure and free sale. "The government will now take the rehab and infrastructure cost into account while computing the security deposit and performance guarantee," a senior government official said.

That means the maximum security deposit the government will get will not exceed Rs20 crore for each zone, a drop from the Rs50 crore it would have earned as per the earlier norms. Similarly, the maximum performance security the government will get will not exceed Rs175 crore from each zone, as against Rs500-Rs700 crore as per the earlier policy.

The bidders who will be awarded the project will be allowed to pay the 10% premium in two instalments. While 5% has to be paid within 30 days of receiving the offer letter, the balance has to be paid within 30 days after that.

The government hopes that the concessions will encourage many developers to bid for the project. However, a developer said he was not sure if his consortium will be able to submit the bid by July 20. "It will take time for us to do the financial calculations based on the amendments the government has made in the master plan, which states we will have to give more area to the slum-dwellers being rehabilitated. Our agreements with foreign partners are in place, but it will take us some time to raise the finances required," the developer said.

Social activists have denounced the government's decision. Terming the latest master plan "Machiavellian", the activists said that the move will deprive 1 lakh families of their traditional livelihood. The reworked master plan will benefit the developers, they said.

A committee of experts set up by the government under retired chief secretary DM Sukhtankar to assist in planning the Dharavi project had also raised many objections to the plan in a letter to chief minister Ashok Chavan.

URL: http://www.dnaindia.com/mumbai/report_a-windfall-awaits-dharavi-developers_1268276