‘Set up special purpose vehicle for big projects’ | mumbai | Hindustan Times
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‘Set up special purpose vehicle for big projects’

mumbai Updated: May 21, 2011 01:36 IST
Zeeshan Shaikh
Zeeshan Shaikh
Hindustan Times
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The civic body is keen to prove its capabilities by undertaking and executing big-ticket infrastructure projects such as the garland freeway. However, the state government feels it would be a safer option for the Brihanmumbai Municipal Corporation (BMC) to set up a special purpose vehicle (SPV) to undertake such projects in the city.

A special purpose vehicle is a legal entity created to fulfill specific objectives. SPVs are usually used to isolate the parent body from financial risk.

The BMC, which has an annual budget of Rs21,000 crore, feels it has been unfairly kept away from big infrastructure projects. Apart from that, lack of funds has forced has made it difficult for the corporation to take up any major projects in the past two years.

With ambitious projects such as the Mumbai Eye put on the back burner due to paucity of funds, the civic body is afraid that its plans are now being hijacked by other organisations such as the (Maharashtra State Road Development Corporation). The MSRDC has also proposed to set up a Mumbai Eye similar to the London Eye.

“A state empowered committee headed by chief secretary Ratnakar Gaikwad has recommended that the civic body consider creating an SPV for taking up major infrastructure projects,” a senior state government official said.

The state recommended that the BMC take help from a global consultancy firm, Mckinsey and Co, which has showed interest in assisting the civic body.

The SPV, which is likely to have the state government as an equity partner, will also allow chief minister Prithviraj Chavan to have a say in the decisions of the BMC.

For several years, the Congress-Nationalist Congress Party combine has been trying to make inroads into the BMC, which has been controlled with an iron grip by the Shiv Sena for nearly to two decades.