One of the options is to form special purpose companies with participation from the road transport ministry since these bridges are to have road components as well. Such companies can borrow money from the market and for revenue, levy a toll on the road portion and surcharge on the rail bridge. However, a recent assessment done by Infrastructure Leasing & Financial Service (IL&FS) has revealed that tolling these facilities will not generate much revenue with the government left to pay a huge subsidy in order to service debt raised by such a company.
A company taking up an unviable project will not get debt from any financial institution, says former financial commissioner, Railway Board AV Poulose. He feels that these projects are needed in the national and developmental interest but the government cannot saddle any commercial organisation, including the Railways, with unviable projects. They should ideally be taken up through government funding with help from multilateral agencies.
The bridges on the Brahmaputra at Bongibeel and the Ganga at Monghyre are sanctioned projects with estimated cost of Rs 17,67 crore and Rs 921 crore, respectively. The total project cost jumps up to Rs 4,154 crore in the case of Bongibeel bridge in case of 4:1 debt-equity ratio. According to senior railway officials, the Railways engaged IL&FS to prepare a detailed financing and investment banking report for the projects.
At a meeting earlier this year between railway minister Nitish Kumar and the then finance minister Yashwant Sinha, it was decided that these projects would be taken up through formation of a special purpose vehicle. However, it is now felt that such projects can be funded through market borrowings only if the government agrees to give direct subsidy to service debt, said an official. The issue, which is currently being discussed within the Railways, is likely to be taken up with the finance ministry soon. IL&FS studied the project cost for the Bongibeel bridge under four models with debt-equity ratio varying from 4:1 to 1:1. It was found that interest becomes significant part of the total capital cost since the project involved extraordinary construction period. However, toll and surcharge revenue vary in the range of Rs 20-30 crore per year. These calculations were based on inputs from chambers of commerce, state government and truckers. A government subsidy of Rs 700 crore in initial years and Rs 300 crore towards the end of the project would be required in case of a debt-equity ratio of 4:1 while it would be Rs 400 crore and Rs 200 crore in case of 1:1, pointed out an official.
The cost of the Munghyre bridge is also estimated to go up from Rs 921 crore to Rs 1,984 crore in the case of debt-equity ratio of 1:1 and Rs 2,383 crore in case of 4:1.