PRIME PROPERTY: The land where the Makkaji Chowk complex is slated to be constructed near K.R. Circle in Mysore. — Photo: M.A. Sriram

MYSORE: Is Mysore City Corporation (MCC) set to incur heavy losses from the Makkaji Chowk project as it failed to assess its commercial potential? Why did the authorities fail to prepare an economic model to assess the financial gains to be accrued by the project?

These are questions being raised by the citizens' forum that is surprised at the fact that the authorities have "failed" to prepare an economic model while negotiating the Makkaji Chowk project despite the management expertise available.

Mysore Grahakara Parishat (MGP) has prepared an economic model based on the date available on the project. It has pointed out that MCC is on the verge of being financially ripped off and also cash-strapped.

Bhamy V. Shenoy, management expert and consultant on mega oil projects for many Governments in Central Asia, said that no major financial decision was taken these days without developing an economic model even in the public sector except in countries where modern management practices were unknown. "Mysore has four reputed management institutes where students are regularly taught techniques to assess the economic viability of projects. Despite such intellectual capital, one fails to comprehend as to why the MCC failed to develop an elementary economic model to assess the financial benefits of Makkaji Chowk," Dr. Shenoy said.

The MGP has developed a reasonably sophisticated model to study the economic viability of Makkaji Chowka, taking into consideration the effect of inflation, land value, construction cost, and rental revenue on the investors, lease value for the corporation, lease revenue escalation signed by MCC and so on.

The model prepared by MGP pointed out that even under conservative assumptions, investors in Makkaji Chowk stood to earn at least 19 to 22 per cent rate of return, but they were more likely to earn between 30 to 40 per cent returns. These returns were based on the assumption that parking is provided free, he said.

Dr. Shenoy said these were extremely attractive rates of interest and had the MCC taken the help of a consultant, it could have avoided the controversy.

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