FinMin okays harbour link funding

The union finance ministry on Tuesday granted in-principle approval to give viability gap funding for the Rs 9,630 crore Mumbai Trans Harbour Link (MTHL), one of Mumbai's showcase projects. The ministry has reached common ground with the city's development authority and agreed to treat the project as a bridge instead of a road contract.

The empowered institution of the finance ministry decided to recommend the proposal for committing central government funds to the tune of Rs 1,920 crore — 20 per cent of the project cost — to MTHL, which will have the longest sea link in the country across the Mumbai harbour from Sewri to Nhava.

The finance ministry was earlier unwilling to grant viability gap funding as per the original terms of the concession agreement proposed by the Mumbai Metropolitan Region Development Authority (MMRDA), which is implementing the project, despite its unique risks.

The 22-km MTHL, for which the MMRDA has shortlisted five consortia, has been in the planning stages for more than three decades and has gone through two failed rounds of tendering in the past.

In the first meeting held in September, the ministry had asked the authority to treat the sea link as a road and reduce the proposed concession period.

Officials from the ministry had also said the internal rate of return for the project should be 15 per cent. "However, we explained to them that this is a very risky project and hence the rate of return needs to be higher. So we have agreed on the internal rate of return to be 17 per cent," said Rahul Asthana, metropolitan commissioner at MMRDA.

Other than the rate of return, the parties have agreed on having the concession period as 35 years instead of the 45 originally proposed by MMRDA, or the 30 that the ministry was insisting on.

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