State won’t act as Metro, MTHL guarantor

The state government has refused to act as a guarantor for all the proposed Metro corridors in the city and the 22-kilometre-long Mumbai Trans Harbour Link (MTHL) connecting Sewri with Nhava Sheva where the Mumbai Metropolitan Region Development Authority (MMRDA) is obtaining loans from international financial institutions.

For two Metro corridors, the implementing agency MMRDA is obtaining loans from the Asian Development Bank (ADB) and for the Rs 17,700 crore-MTHL, the MMRDA is taking a loan Rs 15,000 crore (85 per cent of the total cost) from the Japanese International Cooperation Agency (JICA) for the construction of the bridge.

The development will compel the authority to pay 1.2 per cent of the total loan amount of the project that is Rs 200 crore to the Union finance ministry as bank guarantee for the MTHL. Further, in case of metro corridors, the estimated cost for all the proposed metro corridors would increase as the MMRDA will have to pay a certain part of the loan amount to the Centre for it to act as a guarantor.

Subsequently, after the payment, the Centre is supposed to issue guarantees for the projects. In every project where the state seeks funds from any international financial institution, the Centre, which is the Union finance ministry, has to act as a bank guarantor for the international agency to fund the project.

“In the case of metro corridors in the city and the MTHL, the state government has denied to act as a guarantor due to which the MMRDA has to automatically become the guarantor. Accordingly, for this we will have to pay the Centre for it to act as a guarantor,” said an official under the condition of anonymity.

“The reasons behind the state government not wanting to be acting as a bank guarantor could possible be its unwillingness to have an additional financial liability at a time when it has already taken many infrastructure projects,” the official added.

He further said, “The Rs 30,000-crore Mumbai-Nagpur Expressway project will involve drawing heavy funds for the project from international funding agencies. The state may prefer to act as guarantor for the expressway to other infrastructure projects.”