Reliance Sea Link One Pvt Ltd (RSOPL), an arm of Reliance Infrastructure (RInfra), has raised a couple of objections on the funding mechanism for the Worli-Haji Ali sea link.
These objections are primarily related to the withdrawal of the state government’s guarantee towards the Rs 5,000-crore project in the event the Maharashtra State Road Development Corporation (MSRDC) fails to perform its obligations, including termination payments.
The company has also objected to the state government’s directive to MSRDC to own up the responsibility of payment of a viability gap funding of Rs 1,392 crore. According to the concession agreement between RSOPL and MSRDC executed in June 2010, the state government is to provide the support through MSRDC. However, the government has flatly refused to provide the VGF to MSRDC which is not in conformity of the concession agreement.
RSOPL had submitted these objections through a communication sent to MSRDC last week. This has further created an uncertainty over the implementation of the project and also over the financing. The company has already tied up with ICICI Bank to get necessary funds for the project. However, it cannot get the disbursements unless basic documents like the state support agreement is signed. The company has also not paid Rs 1,634 crore to MSRDC to take over the existing Worli-Bandra sea link project. The Worli-Haji Ali stretch is an extension of that.
The Worli-Haji Ali project has been cleared by the state cabinet and its a part of a ‘war room’ project of the government. According to the concession agreement, the project is expected to be commissioned by December 2014.
When contacted, an RSOPL official told Business Standard: “The company is currently involved in discussion with MSRDC and the matter will be resolved soon.” An MSRDC official also hoped that the implementation of the project would begin soon. “The things will be read as per the concession agreement,” the official said.
The state finance department has raised objections against the provision of the state support agreement wherein the state government is to support the project and the concessionaire in case of MSRDC's default in payment. However, MSRDC is silent on this issue.
MSRDC is totally disappointed over the RSOPL's alleged failure to submit documents relating to the financial closure by July 3 as prescribed in the concession agreement.
