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Multiple financing for Mumbai infra projects

September 12, 2011

While agencies look at diverse sources to meet huge fund demand, experts say more innovation needed to attract investment

In order to improve the growing transport needs of India’s financial capital, the authorities are looking at various ways, sources and methods to fund infrastructure projects

The third phase of the Rs 47,000-crore Mumbai metro rail project is now proposed to be a fully underground stretch, from Colaba to Bandra and the airport. The cost has escalated to Rs 18,000 crore. Says Dilip Kawathkar, spokesperson of the Mumbai Metropolitan Region Development Authority (MMRDA): “Japan International Cooperation Agency is likely to provide 40 per cent of the funds.” He says the World Bank had also shown interest, though no formal proposal or presentation had been made to their officials.

The Rs 10,000-crore Mumbai Trans-Harbour Link (MTHL) project, to connect Sewri in Mumbai and Nhava Sheva in Raigad district, is likely to see some new incentives for prospective bidders. Metropolitan commissioner Rahul Asthana said MMRDA planned to compensate the build-operate-transfer (BOT) operator of the MTHL project in case the toll collection is lower than projected (in case of higher toll collection, the operator would have to share the benefit with MMRDA).

A long-tenure soft loan is proposed for the BOT operator; in addition, to encourage more bids (earlier tenders had to be called off due to lack of enough parties), it is proposed to compensate the second and third-lowest bidders for the costs they incurred in doing so.

Phase-II of the Mumbai Urban Transport Project is underway, to improve suburban railway services. This is being jointly implemented by MMRDA and Maharashtra State Road Development Corporation. The phase has 11 projects worth Rs 5,300 crore, with a World Bank loan for Rs 1,910 crore.

Says Sudip Mozumder, advisor, World Bank: “The Bank remains committed to support the (state) government’s efforts to reduce some of Mumbai’s infrastructure gaps.”

He noted that the funds required for Mumbai’s infrastructure were huge, but Bank funds are limited. “It is critical, therefore, that the Bank funds are deployed in projects that have a transformative role, and can help leverage more funds. The government of India, government of Maharashtra and the Bank are currently exploring such opportunities. Discussions are underway but no decision has been taken,” he said.

Says Arvind Mahajan of consultancy major KPMG: “The basic formula for financing complex infrastructure projects is a mix of government and private funds. Also, several projects are linked with each other. . The Navi Mumbai International Airport project, for example, is closely linked to MTHL. A public-private partnership (PPP) is the best method for funding, (so) the project should be structured in a way that the private sector can participate.”

Says consulting economist Sunil Bhandare, “Long-term financing of projects by the private sector needs a viable corporate debt market. This is not so in India and the major corporates are struggling to manage investment, battling with global uncertainty, inflation and high interest rates. This might dissuade financiers from investing further in such projects. What is needed is finality in scope, content and policy, so that the prospective investors are encouraged to fund the projects.”

Arun Mokashi, a transport specialist, says, “In transport infrastructure projects, unanimity is required among all the institutions. There are several instruments —PPP, BOT, viability gap funding, etc. What is needed is the will to harness this sort of a financial arrangement into the system for infrastructure projects.”

Source: http://www.business-standard.com

Written by ITW Editor · Filed Under Mumbai, Transport 

3 Comments on “Multiple financing for Mumbai infra projects” Post your comment

  1. H.M.SETHIA on September 15th, 2011 5:25 pm

    WE ARE REPERSENTING 7 HIGHLY REPUTED INVESTORS OF THE WORLD FOR INFRASTRUCTURE PROJECTS SPECIALLY GOVERNMENT OR SEMI GOVERNMENT PROJECT ON BOT SYSTEM.OUR COMPANIES TAKE UP ONLY PROJECTS OVER $500 MILLIONS AND MAXIMUM NO LIMIT.
    WE WOULD APPRECIATE IF YOU GIVE US A CHANCE FOR PRESENTATION, WE WOULD APPRECIATE

  2. H.M.SETHIA on November 1st, 2011 2:45 pm

    WE
    ARE REPERSENTING 7 HIGHLY REPUTED INVESTORS OF THE WORLD FOR
    INFRASTRUCTURE PROJECTS SPECIALLY GOVERNMENT OR SEMI GOVERNMENT PROJECT
    ON BOT SYSTEM.OUR COMPANIES TAKE UP ONLY PROJECTS OVER $500 MILLIONS
    AND MAXIMUM NO LIMIT.
    WE WOULD APPRECIATE IF YOU GIVE US A CHANCE FOR PRESENTATION, WE WOULD
    APPRECIATE

  3. sabu on October 30th, 2012 1:45 pm

    sir

    pls give me an appointment to discuss about huge infrastructure projects( goverment and private.

    Regards
    Sabu
    TVM

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