News: Mumbai Metro project gets lifeline
(DNA 02/01/2007) New Delhi - Finally, there is hope for the first phase of Mumbai Metro project where viability gap funding (VGF) from the Centre goes.
While the finance ministry had rejected VGF through the public private partnership (PPP) route, senior officials said, the Union urban development ministry might provide funds for the project from its own VGF kitty.
A provision for this is likely to be made in the Union Budget for 2007-08.
A special purpose vehicle (consortium), led by Anil Ambani-controlled Reliance Energy Ltd (REL), is implementing the Rs 2,356 crore first phase of the metro that is likely to have daily ridership of 5-6 lakh a day.
“Though the VGF under PPP route was denied to the first phase of the project on the ground that the bidding for the project was finalised before the VGF scheme was finalised, it has been decided that this funding route will be available for other corridors of the metro project,” said an official.
Sources said the urban development ministry was now in the process of opening its doors to the first phase.
As in the case of VGF under PPP route, the urban development ministry can provide funding up to 20% of the project cost that works out to be about Rs 471 crore though the contractor for the project had quoted Rs 650 crore as VGF. The remaining funds could come from the Maharashtra government.
The Union urban development minister can approve funding up to Rs 500 crore on its own without having to go through the Cabinet Committee on Economic Affairs, said an official.
“We have circulated a note for the purpose and have sought views of the ministry of finance in order to process the funding for the project,” said a ministry official.
A VGF provision was always available to the urban development ministry under the Union Budget but the ministry had never used it.
The current Budget has even made an allocation of Rs 30 crore under this head but it had remained unutilised.
The first phase of Mumbai metro will become the first project to get the VGF from the urban development ministry.
The project under the concession agreement is expected to be constructed in five years.
The debt:equity ratio for the project would be finalised once the financial appraisal process was completed. Currently, lenders have been mandated to carry out te appraisal process.
While the finance ministry had rejected VGF through the public private partnership (PPP) route, senior officials said, the Union urban development ministry might provide funds for the project from its own VGF kitty.
A provision for this is likely to be made in the Union Budget for 2007-08.
A special purpose vehicle (consortium), led by Anil Ambani-controlled Reliance Energy Ltd (REL), is implementing the Rs 2,356 crore first phase of the metro that is likely to have daily ridership of 5-6 lakh a day.
“Though the VGF under PPP route was denied to the first phase of the project on the ground that the bidding for the project was finalised before the VGF scheme was finalised, it has been decided that this funding route will be available for other corridors of the metro project,” said an official.
Sources said the urban development ministry was now in the process of opening its doors to the first phase.
As in the case of VGF under PPP route, the urban development ministry can provide funding up to 20% of the project cost that works out to be about Rs 471 crore though the contractor for the project had quoted Rs 650 crore as VGF. The remaining funds could come from the Maharashtra government.
The Union urban development minister can approve funding up to Rs 500 crore on its own without having to go through the Cabinet Committee on Economic Affairs, said an official.
“We have circulated a note for the purpose and have sought views of the ministry of finance in order to process the funding for the project,” said a ministry official.
A VGF provision was always available to the urban development ministry under the Union Budget but the ministry had never used it.
The current Budget has even made an allocation of Rs 30 crore under this head but it had remained unutilised.
The first phase of Mumbai metro will become the first project to get the VGF from the urban development ministry.
The project under the concession agreement is expected to be constructed in five years.
The debt:equity ratio for the project would be finalised once the financial appraisal process was completed. Currently, lenders have been mandated to carry out te appraisal process.
posted by InCar Group Press Room at 23:22
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