State To Fund Sewri-Nhava Bridge Through Cess

The Maharashtra government plans to fund the 18.4-km-long bridge connecting Sewri in Mumbai and Nhava on the mainland over the sea through a cess on development and on the sale of properties in the beneficiary zone.

The four-plus-four lane bridge, costing Rs 4,106 crore, can be totally funded out of the development cess but will face shortfall in revenues during the construction period which will be funded by raising loans from financial institutions. The project slated to be completed by 2002-03 is now awaiting environmental clearance from the Centre.

The development cess will be levied on the beneficiary zone of the proposed bridge and its approaches. The cess on properties sold will also be for the same area. The other sources of financing will be real estate development at both sides of the bridge and contribution from beneficiary institutions and orgainsations. A major chunk of revenues is also expected to come from toll fees that come into effect when the bridge becomes operational.

 

The revenue from the cess and tolls is expected to increase over the years and will be utilised to pay back the loans taken from financial institutions. The project report of the sea link envisages that the loan repayment will begin in the year 2006 when the project breaks even.

The project report mentions two alternatives for the bridge, a three-plus-three lane and a four-plus-four lane construction, but has recommended the latter option. It is possible to ultimately meet the total project and interest liability even with eight-lane bridge and approaches, the report states.

The revenue from development cess and registration on cess on land is estimated at Rs 8,010 crore which will more than cover the cost of the project. The inflows are, however, staggered till 2006-07 and hence, the need for market borrowing. This apart, the toll collection is expected to be Rs 64 crore in the first year of operations and will rise to around Rs 90 crore in the year 2006-07, when the project breaks even. The proposed toll is Rs 30 per trip for cars and Rs 60 per trip for buses and trucks.

The total deficit in the cash flow of the project is estimated to be Rs 3,081 crore till 2006-07. This is expected to be raised through market borrowings. The report states that the market borrowings would be repaid with an interest of 20 per cent per annum from the revenue collected as development cess and registration charges.

The report says that these borrowing will require a letter of comfort from the state government and to make the project viable, the government should not charge any fees for this arrangement.