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State-bidder row stalls Metro work

While the MMRDA estimated the viability gap funding for the project to be Rs600 crore, the Reliance led-consortium sought a subsidy of Rs1,251 crore.

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It was a cinch, or so everybody thought. But now a difference of opinion between the state government and the short-listed bidder for the first metro rail between Versova and Ghatkopar has stalled the project.

The two have not been able to reach an agreement on the quantum of government subsidy for the project, which is touted as an alternative transport system to the over-burdened suburban rail services.

The Reliance Energy led-consortium has now sought time of two more weeks to make a final offer after concluding negotiations with the MMRDA recently.

The extension has, therefore, pushed the plan of the Mumbai Metropolitan Region Development Authority (MMRDA) to launch the project by month-end.

While the MMRDA estimated the viability gap funding for the project to be Rs600 crore, the Reliance Energy led-consortium sought a government subsidy of Rs1,251 crore. (Viability gap is the difference between the estimated project cost and the actual bid cost. A government authority normally fills the gap by raising funds through bonds or loans or by seeking central assistance).

The MMRDA has a 26 per cent stake in the project. The remaining 74 per cent will be invested by the bidders. Reliance Energy had emerged as the lowest bidder with a bid for Rs2,356 crore for building the 11-km rail network.

Reliance ADAG contended that a reduction in viability cost was not realistic as projects of this scale were prone to cost and time over-runs, government sources said. However, senior MMRDA officials disagreed.

Meanwhile, notwithstanding the extension sought by Reliance, the government is looking for alternative avenues to fund the project. CM Vilasrao Deshmukh is planning a trip to Japan, during which he will seek help from Japanese Bank for International Corporation for the project.

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