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The MMRDA Projects

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Fund Raising through Foreign Bonds May help Commence 60,000- cr Worth Projects in Pipeline.

Mega plans always seem to look good on blueprints but when the time comes to loosen up some cash for these ambitious projects the balloon deflates. It happened with Virar-Alibaug multimodal corridor.

It seems that the solution to this problem is well met. MMRDA now plans to raise finance through foreign bonds as an alternative to project-specific loans, which often lengthen the execution period.

The MMRDA projects with a whopping price tag of INR 60,000 Crore are in pipeline. These encompass 118-km Metro network in Mumbai, a 22-km link from Sewri to Nhava Sheva across the Mumbai harbour and a 126-km multi-modal corridor from Virar to Alibaug.

MMRDA Metropolitan Commissioner U P S Madan said, “Currently, we have sufficient resources, but going forward, we are going to implement mega projects so we will need funds. One alternative is getting project-specific loans, but we are considering raising funds through foreign bonds. Foreign bonds have some advantages as compared with project-specific financing. We will first have to get a credit rating done for MMRDA to get started.”

The MMRDA never got any annual allocation from the state government.

Foreign bonds which are issued in a domestic market by a foreign entity in the currency of the domestic market. For now Japan International Cooperation Agency (JICA) has committed Rs 13,235 crore for Colaba-Bandra-Seepz underground Metro project which costs 23,136-crore.

“In case of project-specific financing, the agency granting a loan first evaluates the project and is involved in approvals at every process. That takes some time. In case of funds through foreign bonds, there will be no pre-evaluation and we will have a ready pool of finances to tap into,” said Madan.

For another project such as Sewri-Nhava Sheva Mumbai Trans Harbour Link MMRDA has not make much progress. , as JICA, from which it has sought a loan, has been appraising the Rs 11,000-crore project from technical, social and environmental aspects for over eight months. After the loan is given green signal MMRDA will have to take consent for all major decision on the project

Ajay Saxena, an expert on public-private partnership and an adviser to the state government, however, said this was beneficial as there was an extra check on the feasibility of the infrastructure project and additional expertise on board with project-specific financing.

Also, when opting for a bond, the agency should have a very clear and risk-free plan of how it is going to service it. In project financing, one has to repay in small amounts over a period of time while in the case of bonds one has to be ready to bear a bullet payment. Ajat Saxena


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