To push MTHL, MMRDA links loan to traffic

To ensure smooth bidding for Mumbai Trans Harbour Link (MTHL), which has seen two failed rounds of tendering, MMRDA has decided to loan up to Rs 1,000 crore to the selected concessionaire in case traffic on the link is less than 80 per cent of the estimate for the first seven years.

"The five consortia bidding for MTHL were concerned about traffic flow, so we decided to make a loan available. If traffic is not as per projections, the revenue will be lower than anticipated but the concessionaire will have to repay debt taken to execute the project," said an MMRDA official.

MMRDA estimates about 62,000 vehicles to use the 22-km link every day in the initial years. MTHL, being built in public-private partnership at a cost of Rs 9,630 crore, will be opened to traffic in 2018. It will connect Sewri in South Mumbai to Nhava in Navi Mumbai. Having been in the planning stage for more than three decades, MTHL is viewed as a risky project because traffic will depend on main land development.

The interest on the loan will be 2 per cent higher than the market rate at which MMRDA will borrow money. The concessionaire will have to start repayment from 2033.

MMRDA will make a modification in the request for proposal document to make the loan provision after getting central government nod.

"We had a meeting with the department of economic affairs (Union finance ministry) on March 15. They seem to be open to the modification. Another meeting is likely next week," the official said.

MMRDA has taken several measures to ensure smooth bidding this time around. The development authority has assumed a higher internal rate of return for the project at 17 per cent and granted a concession period of 35 years, which is longer than most public-private partnership projects.

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