State road agency is broke
The state’s finance department has refused to lend a helping hand to the broke Maharashtra State Road Development Corporation (MSRDC), forcing it to go to the public to raise funds for its projects.mumbai Updated: Feb 23, 2010 01:15 IST
The state’s finance department has refused to lend a helping hand to the broke Maharashtra State Road Development Corporation (MSRDC), forcing it to go to the public to raise funds for its projects.
The agency that built the Mumbai-Pune expressway and the Bandra-Worli Sea link will soon issue bonds to raise money for its future infrastructure projects.
The state government has, however, agreed to stand in as a guarantor to the MSRDC for loans up to Rs 425 crore. Based on this, the MSRDC will float bonds for up to 10 years with an interest of up to 10.25 per cent.
The agency has an overall liability of Rs 4,400 crore and is yet to pay many of its contractors. It had alleged that a part of its financial crisis was because the state government had not paid up Rs 2,300 crore it owed the agency as support money for various projects. The finance department had refuted this claim but has now agreed to be guarantor.
A carefully worded government resolution issued last week states that the government guarantee will come with an annual fee of 4 per cent. It has also indirectly warned MSRDC that “its moveable and immoveable property will be auctioned if, at the end of the ten-year period, it cannot redeem the bonds.’’ MSRDC officials were not available for comment.
“The state has agreed to give a guarantee for up to Rs 425 crore. If MSRDC can justify raising this amount then we may give further guarantee,” said a senior bureaucrat requesting anonymity because he is not authorised to speak to the media. The bureaucrat added that the MSRDC was looking for direct assistance of Rs 1,200 but that has been rejected.
This may not solve all of MSRDC’s financial woes but it will give a breather, especially since it has staked a claim to build the 22-km Mumbai Transharbour Link (MTHL).
The agency is currently competing with the cash rich Mumbai Metropolitan Region Development Authority to implement the MTHL and inland water transport projects in Mumbai.
The agency has ongoing projects like building high-speed corridors and flyovers, and widening roads across the state worth Rs 3,311 crore.
This is not the first time the MSRDC will be approaching the public for funds.
The corporation, conceived by the Shiv Sena-Bharatiya Janata Party government to build the Mumbai-Pune expressway and 50 flyovers in the city, had issued bonds worth Rs 800 crore in 1998-1999.