Infra developers in wait and watch mode in new Uddhav-led coalition govt

Shiv Sena has so far expressed concerns over car shed for the city's planned metro network, the bullet train and the West Coast refinery projects

After Maharashtra saw a change of government last week, infrastructure and energy projects in the state are now shrouded in political uncertainty. The Shiv Sena-led coalition government took oath of the office last Thursday.

Shiv Sena has so far expressed concerns over the car shed for city's planned metro network, the bullet train and the West Coast refinery projects. 

The fate of the Mumbai Metro network project, at present, remains unclear. Concerned officials from the authorities implementing this project, Mumbai Metropolitan Region Development Authority (MMRDA) and Mumbai Metro Rail Corporation (MMRC), on Tuesday said the stoppage of work is limited to the metro car-shed and tree-felling at Metro-line 4 has been halted. 

However, not all contractors building the network are continuing work as usual. “Work on the metro line has slowed down due to the political uncertainty around it and expectation of a review of certain sections of the network,” said one of the contractors, who did not wish to be identified. 

Industry experts also raise concerns over other big projects in the city and state. “There are several ongoing projects (metro, airport, MTHL, BDD Redevelopment etc). It would be important to keep the momentum on these, so they are completed in time. Future of projects awarded but not signed, like Dharavi Redevelopment, could affect foreign investor perception,” said Manish Agarwal, Partner at KPMG in India.

 Maharashtra is not the first state where projects hang in balance due to a change in government. Global financiers have warned the Indian government, through the Ministry of External Affairs (MEA), that they might drag Andhra Pradesh to international arbitration for cancelling clean energy projects. These were scrapped by the newly elected state government in July, citing wrongful bidding.

 People with direct knowledge of developments at the MTHL project add, work on the link is progressing on schedule. 

As of March 2019, Mumbai alone contributed Rs 64,134 crore worth of orders for Larsen & Toubro, Hindustan Construction Company, Reliance Infrastructure, Tata Projects, Kumar Infraprojects and Simplex Infrastructure combined. The data was compiled from the latest available company releases and rating agency reports. 

The fate of the West Coast Refinery planned as a joint venture between the state-run oil companies and foreign partners also remains unclear. Experts from the oil and gas industry see prospects for this project bleak, which has faced resistance over land acquisition so far. B Ashok, chief executive officer for Ratnagiri Refinery and Petrochemicals, the company formed to execute the project said,” It is too early for me to comment on the project status.” 

Some infrastructure companies are, however, not worried about the latest political developments in the state. “Our contracts are cash contracts and tied to the achievement of work milestones. In the event of the metro not running, it is a loss to the commuter, not the developer,” said an official from a company executing one of the metro project contracts in the city.

Local news reports this week also suggested the state looks to review the Mumbai-Nagpur Expressway project.  Contractors, who are executing these projects, are so far not worried. “The reports suggest it is a review. They can review it, but work on the project continues and we do not see any major concern as of now,” said an official from one of the companies executing part of this project.