Major Mumbai PPP on hold

Mumbai’s Elevated Rail Corridor PPP has been put on ice due to political opposition.

Set to be one of the largest PPPs in India, the project has been put on hold following a meeting between Prime Minister Manmohan Singh and Maharashtra Chief Minister Prithviraj Chavan.

The Maharashtra government has shown strong opposition to the project with the outcome being that the project is no longer viable "in the present form".

The main reason for the opposition is said to be a miscalculation of ridership and revenue rates. With this project the state is supposed to give land at reduced rates, while allowing the concessionaire to raise money by commercial utilisation of the 26 station complexes through enhanced floor space index. Lower ridership estimates however would mean it would not be worthwhile for the state to make such huge concessions at the cost of revenue.

Eight companies, including Reliance, the Tatas, Larsen and Toubro and GMR, had already responded to the request for qualification. The bidders had expected to be shortlisted by the end of this month, while the commercial contract is supposed to be awarded in early 2014.

Further studies and analysis of the project are expected, however there are fears that this will reduce investor returns.