The country's largest Public-Private Partnership (PPP) project for constructing an elevated rail corridor in Mumbai has hit a roadblock even before the plan could take off.
A state support agreement (SSA), a mandatory condition for initiating such projects, is yet to be signed between the railways and the government of Maharashtra despite Prime Minister Manmohan Singh insisting on completing the process by December 21.
The SSA is an umbrella agreement, ensuring support from the state government for infrastructure projects. Bidders for PPP projects use the SSA as a pre-condition for their bids.
The bidding for the elevated rail corridor project was to be completed before the presentation of the Railway budget later next month. But sources said with delays in signing the state support agreement, meeting the deadline would be difficult.
Infrastructure giants such as L&T, Gammon Infra and GMR Infra have shown interest in the R21,000-crore project.
The project is presently in the pre-bid stage and some of the major infrastructure giants are keen on investing in the project.
“The state support agreement hasn't been signed with Maharashtra government. The state and local authorities have to provide land for the project and the developer would also need clearances for the development of commercial space so that the project becomes viable for him. The duration of concession agreement is also to be decided,” said a senior railway board officer.
“We have written to the Maharashtra government. They are working on the details of the agreement. It is expected to be signed this month,” the officer said.
The project involves the construction of a 63-km-long elevated corridor connecting Churchgate in south Mumbai to Virar. The corridor will be used for an air-conditioned EMU service and it would be offered to the top successful bidder under the Design, Build, Finance, Operate and Transfer (DBFOT) basis.
To make it viable for the concessionaire, development of real estate for commercial purpose at certain locations would be allowed.
A senior official in the Maharashtra government told FE that the total land acquisition requirement of 13.7 hectares for the project has been finalized and the marked land would be provided to the railways.
“We are deciding the locations where the concessionaire would be allowed to develop real estate for commercial purpose,” he said. The railways identified PPP investment of over R1 lakh crore in a number of areas including the Churchgate-Virar corridor