MTHL stuck mid-way

The Maharashtra government is all set to revive the build, operate, and transfer (BOT) model for the Rs 7,600-crore project.Reviving the BOT model, which was discarded for the much-delayed project, would cause further delays, but the state did not have any other option. A final decision on reviving the BOT option has not been taken so far. But the government does not have any other alternative and the state cabinet is likely to take a final call by the end of this month.The project design, plan, and parameters would, however, remain the same.This is a very high-profile project and the government is duty-bound to carry out the entire process of bidding again for the BOT model. The MTHL project — a 22-km-long eight-lane bridge across the Arabian sea connecting the island city with its satellite township — has all along been beset by problems. In June 2008, the government rejected the BOT model after a vexed legalcorporate battle between the consortia led by Mukesh Ambanis Reliance Industries and Anil Ambani’s Reliance Infrastructure. The government said the procedure to select a successful bidder for the BOT option had only caused controversies and delays. Under the BOT option, the government wanted a successful bidder to build and operate the sea-link in the shortest possible span and propose a concession period to recover the investment through levy of toll. But the two bids shortlisted by the government quoted widely different concession periods — the consortium led by Reliance Infra claimed it would construct MTHL in five years and recover the cost in next five years while the other bidder quoted 75 years. This prompted the government to discard the BOT option and go in for a cash contract option by which it can select a private partner only to construct the sealink for a specific cost and hand it over to the government to recover the upfront cost through a toll. Ironically, even this option did not receive a single financial bid from any of the 13 shortlisted consortia even though the government twice extended the deadline to submit final offers. For a while, the government also toyed with the idea of getting the MTHL built by forming a special purpose vehicle comprising various government agencies like the Maharashtra state Road Development Corporation, Mumbai Metropolitan Region Development Authority, and City and Industrial development Corporation. But this option becomes feasible only if the government makes its own investment or gets these agencies to bear the cost. Raising Rs 7,600 crore from the government’s own resources does not seem possible. The government is hence back to the BOT option which is bound to witness procedural delays and perhaps intense corporate competition as well.