MMRDA Mulls Fresh Funding Options For Trans-Harbour Link

The Mumbai Metropolitan Region Development Authority (MMRDA) failed to receive any bids for the third consecutive time this year before the deadline for the Mumbai Trans-Harbour Link (MTHL). As such, the government body is now looking at fresh funding options to get the project started.

The ambitious MTHL project is the second sea link project Mumbai would be seeing after the Bandra-Worli sea link. The MTHL connects Nhava and Sewri, and is 22 km long. Upon its completion, this will be the longest sea bridge in India. MTHL is 27 meters in width and is a 6-lane freeway grade road bridge. It will also be linked to the Western Freeway in the west and the Mumbai-Pune Expressway in the east. The estimated cost of the project is Rs. 9,630 crore and it is expected to complete in 2019.

In 2005, MSRDC (Maharashtra State Road Development Corporation) had invited bids for the project. However, there was a huge difference between the concession period demanded by the contractors and the period proposed by MSRDC. Reliance Infrastructure were initially in the race, but it cancelled its bid in 2007. Later MSRDC decided to implement the project on a cash-contract basis and invited bids in 2008. This too did not receive any bids. MSRDC then decided to hand over the project to MMRDA in 2009. MMRDA had revised the deadline twice and the final deadline was kept for August 2013. However, the project failed to get any bidders for the third time.

Alternate Funding Options

MMRDA is now considering two funding options so that it can build the sea link itself without a private player. Some of the options it is considering include:

1) Annuity

An annuity can be referred to as an agreement or contract between two parties, where one party lends the other party money for a period of time and the receiving party promises to give it back to the lender, with interest in payments over lifetime or a specific number of years. Surrender penalties apply if the lender asks for it too soon. Annuity can be either fixed or variable.

2) Engineering, Procurement, Construction (EPC)

This is a common form of contracting in the construction industry. Under an EPC contract, a contractor designs the installation, procures required material and builds the project. This can be done either directly by the contractor or with the help of subcontractors. Depending on the scope of work, the contractor may choose to carry the project risk for schedule and budget in return for a fixed price called lump sum or lump sum turnkey.

3) JnNURM

Under the Jawaharlal Nehru National Urban Renewal Mission (JnNURM) option, the central government intends to invest $20 billion over seven years for city-modernization and infrastructure projects. MMRDA intends to share the project cost with the Centre and collect public toll to contribute to the overall cost.

4) Declare it as a national project

Declaring the MTHL project as a national project makes the central government the majority partner in it. The National Projects Construction Corporation Ltd (NPCC) is central department which handles national projects.

5) Approach international financial institutions

MMRDA may also consider approaching international financial institutions such as Japan International Cooperation Agency (JICA) and the world bank for funding as well.

A senior official of MMRDA stated that the government body was determined on implementing the MTHL project and would discuss these five options with the state government to finalize a viable option. He also said that MMRDA would be able to finalize a new plan for implementing the project, in a month’s time.