State govt wary of PPP model for elevated rail project


Mumbai: The Maharashtra government is keen to implement the 60-km Churchgate-Virar elevated rail corridor with the cash contract model instead of public-private partnership (PPP) to ensure faster execution. The PPP model allows the concessionaire to raise money by undertaking commercial exploitation of land parcels on the basis of enhanced floor space index.
A railway board official said, “The state government, particularly chief minister Prithviraj Chavan, is wary
about the PPP model as the allocation of project-specific FSI may get them embroiled in a controversy if windfall gains accrue to the concessionaire.”
A model on the lines of the Mumbai Rail Vikas Corporation (MRVC) is being propagated to implement the project.
The official said under cash contract, the state and central governments should provide seed capital while the balance can be raised through loans from agencies. The loan can be repaid by levying a surcharge, as with the Mumbai Urban Transport Project.
A source said, “The state
government is contemplating a development cess or impact fee on properties in the 2-3 km radius of Metro III. A similar revenue model can be worked for the rail corridor.”
The state government’s experience with Metro I (Versova-Andheri-Ghatkopar), implemented with the PPP model, was unsatisfactory. Metro II (Charkop-Bandra-Mankhurd) has been on hold due to the absence of right of way and failure to provide land to build a car-shed to the concessionaire.
A Western Railway official said, “The Mumbai Metropolitan Region Development Authority has implemented the monorail project on cash contract successfully.It has invited bids for Metro III under cash contract as it can be implemented without controversy.”
Under the PPP model, the railways hoped to raiseRs7,000 cr from commercial development of land parcels for the Rs 25,000-cr project. The rail official said the agency hoped to raise Rs 5,000 cr through the Centre’s viability gap funding scheme. Apart from commercial rights, fares, advertising rights and rentals will be used to raise the rest         of the revenue.
A board official said, “The concessionaire may not run the service to optimal capacity or suspend it, as in New Delhi. It can be operated by the railways with cash contract.” An MRVC official said they were ready to execute the project.

Source : Times of India