Given the difficulties involved in raising funds for large infrastructure projects, the Mumbai Metro Rail Corporation (MMRC) has taken a different route for the construction of Mumbai Metro Line III.
This would also mitigate the risk that comes in with allotting the entire project’s work to a single company. MMRC, the executing agency of the 33.5-kilometre, fully underground rail system, has divided the civil works of the project into seven contract packages, which can be bid for by several companies.
“In this way, not only the risk of giving the entire project to one company gets mitigated, but also sometimes it becomes difficult for companies to raise or have entire resources required for a large project like this. So, with several companies involved, different works can go on parallely and independent of the other,” UPS Madan, metropolitan commissioner, Mumbai Metropolitan Region Development Authority (MMRDA) told FE.
The MMRC has been constituted as fully-owned company of MMRDA as of April 30, 2008.
Madan said that though the civil work has been divided into seven packages, individually these are large packages and their scope of work should be good enough to attract interest from large companies.
The Maharashtra government’s decision to adopt this route for Line III seems to be a learning from the past experience on projects such as Mumbai Trans-Harbour Link (MTHL), Line I and II of the Metro and Worli-Haji Ali Sea Link.
MTHL failed to get a single bid last month as bidders found difficulty in raising funds.
Differences cropped up between state government and Reliance Infrastructure over fare hike in case of Metro Line I, which is running almost two years behind schedule and non-availability of land for a car depot in case of Mumbai Metro Line II.
Worli to Haji Ali Sea Link project awarded to Reliance Infrastructure in 2010 was also scrapped due to concerns over viability gap funding and land for the casting yard.
However, the over R23,000-crore Line III is being undertaken on EPC (engineering, procurement and construction) model, with close to Rs 13,000 crore of funding from the Japan International Cooperation Agency (JICA).
Last week, an agreement for the first tranche, of around Rs 4,700 crore, was signed between JICA and the Centre. According to the bid document, the contract packages for pre-qualification of applicants has been divided into two categories.
Though, the pre-qualified agencies selected separately in the two categories will be free to tender for any number of packages, at the time of awarding of the contract, no firm will be awarded more than two contracts. The project, from Cuffe Parade station in the south of Mumbai to SEEPZ in the north, will have 26 underground stations.
The last date for submission of applications for pre-qualification is October 30 while the invitation for tenders are expected to be made by December.