Funding for 702km long Mumbai-Nagpur expressway to burden state
The state government is pulling out all stops to get the 702km long Mumbai-Nagpur expressway off the groundUpdated: Sep 16, 2018, 05:20 IST
The state government is pulling out all stops to get the 702km long Mumbai-Nagpur expressway off the ground. The Maharashtra State Road Development Corporation (MSRDC), the nodal agency constructing the country’s longest expressway finally achieved financial closure to ensure that construction work begins before the end of this year.
But, this funding will come at a cost to the cash-strapped government. With several international funding agencies, that the state had approached, refusing to get on board the Rs 55,000 crore project, the state had got a consortium of nationalised banks to back the project. The consortium of 11 banks led by State Bank of India and Life Insurance Corporation will together lend Rs 28,000 crore for the Phase 1 of the project, involving building the highway.
In return, the MSRDC has agreed to pay an interest of 9.5% for this loan that will be repaid over 28 years. The agency will also mortgage 1,000 acres of land owned by it around the Mumbai-Pune expressway, its first project to the banks as collateral.
Another 29 acres of land in Bandra and 1.5 acres of land at Nepean Sea Road, also belonging to MSRDC, will be mortgaged to the banks.That’s not all.
“The state will provide cash grant of Rs 6,000 crore for the project that will be used to pay interest during the construction phase. The cabinet has sanctioned this,” said Radheshyam Mopalwar, managing director and vice president of the MSRDC.
He said, “The total cost of civil construction has been revised to Rs 34,000 crore including walls across the expressway. We have got a commitment of Rs 28,000 crore from banks for the basic civil construction out of which, sanctions of Rs 23,000 crore is in hand. We can start the project anytime now.”
Mopalwar also admitted that as per agreement, the state will pay an interest rate of 9.5% and MSRDC will mortgage land owned by it as collateral on the loan of Rs 28,000 crore.
“To get funding from international agencies, the gestation period of the project has to be long. In case of the expressway, we have been very aggressive with work timelines,” he said.
A senior bureaucrat said that the state was bending over backwards to ensure at least some portion of the expressway be inaugurated ahead of the 2019 polls.
“This is chief minister Fadnavis’ pet project and he believes it will change the economy of the backward regions of Marathwada and Vidarbha. So, the project has complete political backing. While 9.5% is steep interest rate, the loans we get from international funding agencies is linked to US dollars so it does translate to around 5 to 6 % anyway,” he said.
MSRDC has already taken a loan of Rs 5,000 crore from five other state public agencies including Mumbai Metropolitan Region Development Authority (MMRDA), City and Industrial Development Corporation (Cidco), Maharashtra Housing and Area Development Authority (Mhada), Maharashtra Industrial Development Corporation (MIDC) and Slum Rehabilitation Authority (SRA) to pay for its acquisition costs. It will pay an interest of around 8.14% to these agencies for this loan.
MSRDC is hoping to complete the project within 30 months. The work is expected to take off before the end of this year as tenders for 13 out of the 16 construction packages have been given out. The remaining is expected to be given by end of September.
The Phase II of the project involves building 17 nodes or smart cities along the expressway. MSRDC has also issued Request for Proposal documents for designing these nodes. The land for the nodes will be acquired only through land pooling method which means there will be no cash component for acquisition.