Mumbai rail corridor norms eased as govt struggles to achieve target

Written by Shubhra Tandon | Rajat Arora | New Delhi/Mumbai | Updated: Aug 9 2013, 17:30pm hrs
Fearing a repeat of Mumbai Trans-Harbour Link (MTHL) bidding fiasco, the Railways has sweetened the deal for its largest public-private partnership (PPP) initiative, the Rs 30,000-crore Mumbai elevated rail corridor project. The national transporter has withdrawn the current request for qualification conditions and replaced it with a more investor-friendly one with new clauses, such as additional grant by way of higher viability gap funding and external financial support.

This project is crucial in the government meeting its Rs 1-lakh-crore investment target for the infrastructure sector in the second half of this fiscal.

The ambitious MTHL project hit a rough patch early this week when it failed to attract bidders in the tendering process for the third time, after none of the shortlisted companies placed their bids. Government fears that MTHL issue could be an indicator to a larger problem in the infrastructure sector and wants to make no changes in other large projects.

"There were several changes, such as switching from broad gauge to standard gauge, changes in viability gap funding scheme, increase in land parcels for commercial exploration and external financial support to the concessionaire, which led to the withdrawal of the current RFQ. We hope that the changes would address the concerns of the bidders who would now actively participate in the project," said a rail ministry official privy to the development.

The official added that reissuing of RFQ won't lead to any delay and the project would be awarded on time. The steering committee for infra projects under the Prime Minister's Office (PMO) has set a deadline of January 2014 for the award of contract. The project has already missed two deadlines set by the PMO for early award of the project.

With the changes now, potential bidders will now need to submit docuemnts under the terms in revised RFQ. Infra giants, such as Reliance Infrastructure, Gammon, L&T, IL&FS and GMR, had submitted their proposals as per the earlier document. Railways hopes that changes could bring in more infra companies into the fray.

Railways has withdrawn RFQ because the ministry could not resolve R&R, land acquisition issues with state government and there was no consensus on state support agreement (SSA). I hope project would now be offered to us without any encumberance, a bidder told FE.