Maharashtra Allows Deferred Payment In Highway Sector

The Maharashtra government has introduced a deferred payment scheme to attract private investment in the highway sector. The scheme, if successful, may become a model for the rest of the country to accelerate private participation in the road sector.

Under the scheme, the private promoter contributes to the equity while the state arranges the debt component under the state governments guarantee. Upon the completion of the project, the toll will be collected by the state road development corporation, which will pay the profit at the agreed rate to the promoter and repay the loan to the financial institutions, directly or through the promoter.

 

The total project cost will be worked out by taking into consideration the estimated cost of the project plus bank interest at the rate of 18 per cent plus promoters profit component at the rate of 20 per cent return on promoters capital. Thus the promoter gets an assured 20 per cent return and does not have to bother about either loan arrangement or toll collection.

Maharashtra public works minister Nitin Gadkari said at a press conference in New Delhi yesterday that the scheme was already under implementation in respect of several state-funded projects, but had yet to begin with regard to private sector projects.

Gadkari said the state government planned to implement the proposed Mumbai-Pune expressway and several other road projects under the deferred payment financing scheme and several private promoters had offered to put money in the equity.

The minister said the Mumbai-Pune expressway project was stalled due to delay in grant of environmental and forest clearance by the Centre. If the clearance could be issued soon, the project construction would start by December this year, he asserted.

Gadkari said the state had already demonstrated its ability to implement private sector road projects in a rapid manner, citing the Thane-Bhivani bypass, the countrys first road project to be completed on a build-own-transfer basis.

He listed several other projects which the state government wanted to take up in the private sector. These include five flyovers in Mumbai, besides three other major highway projects: Mumbai-Nasik, Mumbai-Ahmedabad and Mumbai-Goa.

Gadkari said there was no merit in the Union environment ministrys objection that the Mumbai-Pune expressway would endanger wildlife, mainly mouse deer and giant squirrel. He said these animals had never been sighted around the project cite.