In a major setback for the Mumbai Metro project, the Centre has refused to fund the 20km long Colaba-Bandra line citing “very high” viability gap funding (VGF) costs.
The VGF is the part of the total cost that the government pays to make the project financially feasible for the private partner.
Ratnakar Gaikwad, metropolitan commissioner, confirmed that the Central government’s refusal to release the funds.
Now the Mumbai Metropoli-tan Regional Development Authority (MMRDA) will have to hunt for other sources for funding, which may include financial assistance from leading lending agencies such as the World Bank, and also look for an alternative funding model.
“We may be forced to adopt either a direct contract method like the Delhi Metro or go for a combination of both public-private partnership model and direct contract such as the Delhi Metro Rail Corporation’s airport route,” a senior MMRDA official said, on condition of anonymity.
The Hindustan Times had earlier reported that the MMRDA was in talks with the World Bank to fund the Colaba-Bandra Metro line. Friday’s development means that the World Bank’s role assumes greater significance now.
Gaikwad said the Japanese International Co-operation Agency is also in the fray to fund the project. “Since the expenses required are huge and the task at hand is challenging, both agencies are keen on funding the route,” he added.
The agency was planning to use the public-private partnership model for the Colaba-Bandra Metro route, as it had used for the earlier two routes for the Phase 1 of the Mumbai Metro project.
The initial plan was to build the entire stretch underground at a cost of Rs12,000 crore. “But the Centre was reluctant to give the VGF, which was around Rs8,700 crore,” said the official.
Then the agency looked into the possibility of building an underground Metro line from Colaba to Mahalaxmi and an elevated line from Mahalaxmi to Bandra.
“In this option, the cost was around Rs10,000 crore, with a VGF of around Rs5,000 crore. We were expecting the Centre to accept this model. But its refusal was disappointing,” the official said.
He added that the agency even explored the option of underground commercial development near station areas to reduce the VGF, but that too proved to be unfeasible.