Cash-contract model for Mumbai Trans Harbour Link may not be economical: experts
Mahrashtra is planning to build the Mumbai Trans Harbour Link (MTHL) through the old cash-contract model as private infrastructure companies are unwilling to invest in the project which they deem financially unviable.Updated: Sep 04, 2013 14:04 IST
The state is planning to build the Mumbai Trans Harbour Link (MTHL) through the old cash-contract model as private infrastructure companies are unwilling to invest in the project which they deem financially unviable.
However, there are serious doubts as to whether the planned expenditure of Rs 9,600 crore will be recovered.
The state will be using the engineering procurement construction (EPC) model, which is a type of cash-contract model.
In this system, the state or the MMRDA will fund the MTHL by itself and appoint a contractor to build it.
For this purpose, the MMRDA is looking at options such as taking a loan from Japanese funding agencies.
It proposes to recover the amount spent by charging toll tax on the MTHL. However, experts have their doubts as they believe that vehicular traffic on the bridge could be less than anticipated.
Amrit Pandurangi, senior director with Deloitte, a consulting firm, said “With low traffic, it seems impossible to recover the money. The project is not financially viable.”
Interestingly, most of the bidders had pulled out of the project, fearing that the delay in the Navi Mumbai International Airport (NMIA) would mean lower traffic Experts suggested alternative sources for revenue generation.
“As the MTHL project will lead to increase in property rates in surrounding areas, MMRDA should charge betterment charges from the property owners to earn revenues as compensation for the project cost,” said Amrit Pandurangi, senior director with Deloitte. on the bridge.
A former state secretary said “As the NMIA is stuck, investing in the MTHL project comes as a huge risk. One will not be able to recover the project cost since the MTHL is anticipated to witness significantly less traffic.”
A senior official of an infra company, which was one of the five bidders, said “Earlier, it was anticipated that about 60,000 vehicles would use the MTHL daily. However, it will not witness more than 20,000 vehicles if the airport does not come up on time.”
But MMRDA commissioner UPS Madan claimed the project cost will be recovered. “It may take little longer but the cost will be recovered,” said Madan.
“By and large, the MTHL will be constructed on EPC mode and we are working on various options to raise funds,” said Madan.