After failing to attract any bidders for its land at Bandra-Kurla Complex, the Mumbai Metropolitan Region Development Authority (MMRDA) has decided to put its proposed land auction on the back-burner and instead raise funds by issuing secured bonds through Life Insurance Corporation of India (LIC).
MMRDA floated bids in May 2016 but failed to get any bidders for a 50,000-sq-metre plot in G-Text Block at BKC. MMRDA was expecting to rake in about Rs 1,500 crore from its sale. According to a senior MMRDA official, there were no takers because the real estate market is in a slump.
To raise funds for its huge projects, MMRDA now plans to issue secured bonds. “We are planning to raise funds for metro projects through bonds. We are in talks with LIC. We will auction BKC plots later; due to market conditions, there has been no response,” said Pravin Darade, additional metropolitan commissioner, MMRDA. The authority has already completed its rating process through the analytical company CRISIL.
MMRDA is one of the richest planning bodies in the country, with funds of around Rs 17,000 crore, but the estimated cost of projects in the pipeline exceeds this. “Project finance is not an issue for MMRDA. Many of our projects are funded by multilateral or bilateral sources, but MMRDA is also investing in projects; we are putting in money to kick-start projects, especially civil work of the metro corridor. We are not short of funds today. However, we need to think about the future and look at other ways to raise funds,” said a senior official, who did not wish to be named.
MMRDA’s big-ticket projects include seven metro rail corridors, 130 km long, with an estimated cost of Rs 35,000 crore. Another is the Trans Harbour Link, which is estimated to cost Rs 17,750 crore and is being funded by a loan from the Japan International Cooperation Agency (JICA) for 80% of that amount. The balance will be funded by the state government and MMRDA.