SRA asked to pitch in ₹300 crore for Dharavi Redevelopment Project

The Maharashtra government has directed the Slum Rehabilitation Authority to contribute ?300 crore towards the Dharavi Redevelopment Project, with ?200 crore for Rail Land Development Authority and ?100 crore for the project's equity. The Adani Group won the project with a bid of ?5,069 crore, but the Letter of Award was delayed due to the Hindenburg Research report. The lead developer was expected to release the first tranche of ?500 crore within 90 days after the LoA, and the DRP would have to pay back the ?300 crore to SRA after the Special Purpose Vehicle is formed.

Mumbai: The state government has directed the Slum Rehabilitation Authority to contribute ₹300 crore to the Dharavi Redevelopment Project (DRP), of which ₹200 crore will be allotted to Rail Land Development Authority (RLDA) towards the 45-acre railway land and ₹100 crore will be diverted towards DRP’s equity in the Special Purpose Vehicle to be created for the Dharavi project.

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The Housing Department issued the government resolution (GR) on Thursday.

On November 5, 2018, the Devendra Fadnavis-led government cleared the decision to do integrated redevelopment of five sectors under the DRP. It had also signed a Memorandum of Understanding (MoU) with the RLDA on March 3, 2019, to acquire a 45-acre land parcel where in-situ transit accommodation could be provided.

RLDA had demanded ₹1,000 crore as an upfront amount, of which the state government paid ₹800 crore. It was agreed that Maharashtra will pay the remaining ₹200 crore within six months of the Definitive Agreement signed between DRP and RLDA in October 2022. This amount was due on April 17, 2023.

The Adani Group had emerged as the highest bidder for the DRP in November 2022 with a bid of ₹5,069 crore. After the government approved the bid, a Letter of Award (LoA) was to be issued to Adani Group formally awarding the project, however, the upheaval in the stock markets and Parliament over the Hindenburg Research report had delayed the letter.

According to the timeline approved by the cabinet, after the LoA is issued, lead developer Adani Group was expected to form the Special Purpose Vehicle (SPV) which would have ₹100 crore as government equity. Within 90 days from the LoA date, the lead developer was to release the first tranche of ₹500 crore.

“SPV will pay for all the RLDA charges and the first tranche of ₹500 crore is due from the lead developer 90 days after the LoA. Since the LoA is yet to be issued, the ₹200 crore needs to be organised by the Slum Rehabilitation Authority. An additional ₹100 crore also needs to be raised as part of DRP/SRA equity at the time of SPV formation,” the GR said, adding that the DRP will have to pay back the ₹300 crore to SRA after the SPV is formed.