Maharashtra explores EPC model to develop Rs 9,360-cr MTHL project

As per the EPC approach, responsibility for design and construction will be assigned to the contractor for a lump sum price determined through competitive bidding

After three failed attempts to award the Rs 9,360-crore Mumbai Trans Harbor Link project under build operate-transfer (BOT) route, the Maharashtra government proposes to explore engineering procurement construction (EPC) model.

According to the EPC approach, the responsibility for investigations, design and construction would be assigned to contractor for a lump sum price determined through competitive bidding. The objective is to ensure implementation of the project to specified standards with a fair degree of certainty relating to costs and time, while transferring the construction risks to a private sector contractor. This was revealed by Chief Minister Prithviraj Chavan while speaking to Business Standard.

He, however, said the discussion was at a preliminary stage and the final decision would be taken after due discussions.

Chavan’s announcement comes close on the heels of recent fiasco after the five short-listed bidders withdrew from the bidding process.

The state-run Mumbai Metropolitan Region Development Authority (MMRDA) had short-listed five consortia — CINTRA-SOMA-Srei, Gammon-OHL Concessions-GS Engineering, GMR-L&T-Samsung, IRB-Hyundai and Tata Realty and Infrastructure Limited-Autostrade-Vinci Concessions. The concession period for the project would be 35 years instead of 45 years, as originally proposed by MMRDA, or 30 years the finance ministry was insisting on. The project was earlier bidded in 2005 but the bid was cancelled. Subsequently, the project was re-tendered in 2008 but there were not takers.

Chavan admitted it was a major setback but said bidders had cited present economic conditions and the high risk factor for non submission of bids.

“‘Therefore, we will now explore EPC model. The government may consider tied and untied loan from Japan International Cooperation Agency for the MTHL project. The rate of interest under these two arrangements will be quite competitive,” he said.

Further, Chavan said he would plead with the Centre and the Planning Commission to provide viability gap funding, which was currently entitled for PPP projects, be provided to projects to be undertaken through EPC route. He recalled the Centre had already announced viability gap funding of Rs 1,920 crore for MTHL in January.