Mumbai Metro, NURM funding get Centre's nod

The infrastructure projects in Mumbai received a major boost today as Union Urban Development Minister S Jaipal Reddy announced that the central government would take care of 20 per cent of the viability gap funding for the first line of Mumbai Metro connecting Ghatkopar-Andheri-Varsova as well as provide 35 per cent funding for the city's projects under the National Urban Renewal Mission (NURM).

Reddy said, "We will provide financial assistance to all the nine corridors of the Metro which the state government proposes to undertake."

Reddy was speaking to reporters after a meeting with Chief Minister Vilasrao Deshmukh and top officials from the state government earlier in the morning. They briefed him on various infrastructure projects and the central assistance required for these projects.

Reddy said, "The Centre will provide 35 per cent assistance to the city's infrastructure projects such as storm water drainage scheme, the Middle Vaitarana dam and the Sewage Treatment Scheme-II under NURM."

The cost of these projects comes to around Rs 15,000 crore, of which the government will provide 35 per cent. The rest will be financed by the state government and the city corporation.

Reddy added that the Centre was not able to allocate any fund for Mumbai due to "technical reasons" but refused to go in its details. However, he pointed out that the Centre had given assistance to Nagpur in 2005-06. Besides Mumbai, the Centre would also provide fund for infrastructure projects in cities such as Pune, Aurangabad, Nashik and Nanded.

Meanwhile, a senior government official said that the negotiations between Mumbai Metropolitan Region Development Authority (MMRDA) and Reliance Energy (REL)-led consortium over viability gap funding had reached the final stage. The REL-led consortium has agreed to reduce its demand for viability gap funding from around Rs 1,251 crore to around Rs 900 crore and there was general consensus in the government on this figure and final decision would be taken very soon, he said.

P Chandrashekhar, project director, MMRDA, said, "Negotiations with REL are still on and we have not reached consensus yet, but we are hopeful of clinching the deal in two weeks."

It may be recalled that two short-listed consortiums for the project, REL and Unity-IL&FS, asked for viability gap funding of Rs 1,251 and Rs 1,296 crore, respectively. It was more than triple the MMRDA estimates.

However, taking into consideration that re-tendering would further delay the project, Deshmukh directed MMRDA to re-negotiate with the REL-led consortium, which was the lower of the two bids.

Replying to the question about the state government's reluctance to repeal the Urban Land Ceiling Act (ULCA), Reddy said, "We are holding talks with the state government over this issue and trying to sort out the problem."

Repealing of ULC Act, Abolition of Rent Control Act, rationalising of property tax and bringing down the maximum stamp duty rate up to 5 per cent were some of the conditions which states have to follow before they get the funds under NURM.