The Rs 9,630-crore Mumbai Trans Harbour Link (MTHL) project failed to attract any bids despite MMRDA sweetening the deal. Five firms were shortlisted by MMRDA in May last year.
This is the third failed attempt at bidding out the 22-km MTHL,one of the state governments showpiece projects that proposes to establish a link between Sewri and Nhava Sheva across the Mumbai harbour. One of the bidders said the primary reason for not bidding was the uncertainty attached to the traffic the link will attract,especially in the initial years. This is because much of the traffic will depend on the Navi Mumbai International Airport,a project that is yet to take off.
The companies have not disclosed the reasons why they did not bid. One of the main reasons could be that they may not have the funds required for the project, said UPS Madan,metropolitan commissioner at MMRDA. We are now considering either implementing the project as a cash contract or as a variation of the PPP model through an annuity contract. We will take a decision in a month. Once we freeze on the most suitable option,it will take at least six months for the tendering process, Madan said.
The consortia shortlisted were GMR-L&T-Samsung; CINTRA-SOMA-SREI; Gammon Infrastructure-OHL Concessions-GS Engineering; IRB Infrastructure Developers-Hyundai; Tata Realty and Infrastructure-Autostrade Indian Infrastructure Development-Vinci Concessions Development.
Of these,IRB recently wrote to MMRDA saying it would not be bidding for MTHL citing bad experience in a Kolhapur integrated road development project where it was not allowed to collect toll,jeopardising its Rs 500-crore investment.
We have not bid in the absence of a clear traffic projection. There is complete lack of clarity right now on when the Navi Mumbai airport will come up, said an official from one of the shortlisted companies.
We had sensed that this could happen. The problem is not with the project structure,it is with the bidders. In the last few months,from what we have been reading,many have had internal financial problems. Many are over-leveraged, said Ashwini Bhide,additional metropolitan commissioner.
Knowing that similar concerns had failed to attract companies for this project the last time,too,MMRDA had introduced several clauses in the request for proposal documents to dilute the risks for the shortlisted consortia. It had proposed providing a loan of up to 10 per cent of the project cost with a relaxed tenure for the concessionaire in case the actual traffic is less than 80 per cent of the projected traffic for the first seven years.
It had 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. MMRDA was also in talks with Indian Infrastructure Finance Company Limited to provide the concessionaire a loan of up to 20 per cent of the project cost with a longer tenure for repayment and a moratorium on the principal.