Lease deal for Loo Cafe sparks controversy

Hyderabad: The Loo Cafe scheme is brewing up a new controversy with the GHMC being accused of leasing them out to an agency at an extremely low rentals at prime locations like Khairatabad and Serilingampally.

The Loo Cafes have been rented for Rs 4.5 crore at 66 locations for 15 years. This works out to about Rs 100 per month. All the units have been awarded to a company called Ixora FM. The rent would remain unchanged over the 15 year period.

The corporation has leased out land to construct the Loo Cafes at 66 locations in its Khairatabad and Serilingampally zones. Sources alleged that the tender to pick the company was drafted in such a manner that only one company would be declared eligible.

The corporation has earmarked 320 square feet (40 feet x 8 feet) of land to instal the smart toilets with separate entries for men, women and differently-abled persons. The toilets will have facilities such as ramps, handrails and napkin vending and disposal arrangements for women. The agency has to operate and maintain the toilets without collecting usage charges.
 
In return, the agency would be given permission to run a cafe and provide water, ATM, e-commerce ATM and can put up advertisement panels for revenue generation.

The contracted rate of Rs 4.5 crore at 66 locations for 15 years works out to Rs 99.96 per month per cafe. The comparative cost for a similar spot is Rs 30,000 in Serilingampally a month. It means that the agency will pay GHMC Rs 3.37 per unit per day, which won’t even fetch a cup of tea.

GHMC sources said the tender document was prepared to accord lease lands to set up the cafe to the agency. The agency itself conducted a survey to identify the locations prior to the tender finalisation. Having bagged 66 units in Khairatabad and Serilingampally zones, Ixora FM is expected to expand to 114 locations in other zones. Sources said two Loo Cafes were operational, one at Shilaparamam which was generating between '1 lakh and '5 lakh revenue, and a second one was opened recently at the Kondapur dog park.

Sources alleged a nexus between officials and the agency had resulted in the low rate of the lease. “The rents are higher for properties in the old MCH area that were leased out 30 to 40 years ago,” the sources said. A senior GHMC official on condition of anonymity said that three bidders participated in the tender process but two were disqualified in the pre-bid process. He said Ixora FM would pay an annual rent of Rs 40,000 per year in Serilingampally and Rs 50,000 in Khairatabad zone per Loo Cafes. 

Asked about the low rents,  the official said that everything was done within the rules, and refused to reply to questions.