State Clears Sea Link’s Versova Extension

Funding concerns remain; state refuses viability gap funds to RInfra to take up planned work on the Haji Ali section

The Maharashtra cabinet wants the city's iconic Bandra-Worli sea link extended all the way up to Versova in the north. But the big question on everybody's mind is this: Who is going to implement it? A bitter dispute over funding between the state and Reliance Infrastructure (RInfra) may derail this ambitious plan even before the ink has dried on the cabinet papers. 

State PWD minister Chhagan Bhujbal saidthat the Cabinet Committee on Infrastructure met on Wednesday and gave a go ahead to extend the sea link from Bandra to Versova.
For many months now, the state and RInfra have been arguing over what is called the viability gap funding (VGF) for extension of the sea link to Haji Ali, south of Worli. RInfra was to take over the sea link on July 3 and start work on this . 5,000-crore project. But people close to the developer said there is no way this project will take off for many more months as the government has said that VGF is too high and that MSRDC, the state-owned firm, is in no position to fund it. On Wednesday afternoon, another meeting was held between MSRDC and RInfra to sort out the sea link extension issue but no solution was found.
VGF refers to the money provided by the government to help a private developer complete crucial infrastructure projects. These projects may generate great economic benefits but deliver little or poor returns to shareholders of the private developer. Traditionally, governments pitch in with about 20% of the investment cost.
In this case, RInfra wants the Maharashtra government to provide . 1,350 crore, which the state has refused, saying that MSRDC does not have that kind of money. The state has already formed an expert committee to check the possibility of building a coastal road which will cost only . 500 crore and has asked RInfra if they will be interested in developing this. An RInfra official, said according to contractual terms they do have the first right to bid for the newly declared Bandra-Versova project, but the issue of funding has to be sorted out.
The sea link was to be built in four sections -- Bandra to Worli, Worli to Haji Ali, Haji Ali to Nariman Point and Bandra to Versova. While the Bandra-Worli section has cost close to . 1,700 crore, the Bandra-Versova section may cost . 3,600 crore.