Planning dept raises concerns on ​Rs 28,500 crore road project in ​Maharashtra

MUMBAI: The state's planning and finance departments had raised concerns about the financial strain posed by the state's Rs 28,500 crore plan to construct 6,000 km of cement-concrete roads in the state through a revised Hybrid Annuity Model (HAM), TOI has learnt.
The proposal was cleared by the state cabinet in Feb despite issues raised by finance minister Ajit Pawar who belongs to the NCP and cultural affairs minister Sudhir Mungantiwar from the BJP.They had raised questions about the financial model and the drawbacks faced by earlier HAM projects in the state (TOI, Feb 7).
The earlier project to build 10,000 km of roads through the HAM model was implemented in 2017 by the Fadnavis government. It was later reviewed by the Thackeray government which felt the state was paying too much.
The revised HAM scheme has a 30:70 model. The state will provide 30% of the funding. The concessionaire has to raise 70% from the market. This has to be repaid by the state over 15 years. The project is being implemented by Maharashtra State Infrastructure Development Corporation (MSIDC) formed last May under the public works department.
In its response before the cabinet proposal was approved, the planning department pointed out that in all, 345 revised HAM projects for 13,442 km of roads were being considered, which would cost Rs 63,850 crore. Of these, only the first phase which would cost Rs 28,500 crore had come before the cabinet.
The department said given the limited finances of the state and the number of infrastructure projects awaiting completion, such a large spend may adversely impact other projects. It also said govt should ensure the state's financial resources are not spread thin. It said the experience from the implementation of HAM-1 needed to be discussed and explained in detail.
The planning department said the state would have to provide Rs 8,500 crore and agency charges to meet the 30% funding requirement. However, it would possibly also have to stand guarantee for the 70% funding raised through loans by MSIDC. It said decisions regarding the HAM -2 projects should be taken by considering overall liabilities through projects undertaken by MSRDC and loans taken from NABARD and the ADB.
The public works department which initiated the proposal said since the state's role was to provide only 30% of the funds in the first phase, it would be able to get a certain length of roads with minimal financial burden. It also said that work would be taken up only after technical approvals. Also any revised estimates will have to be cleared by the department.
The public works department said in the project, the construction period will be for 2.5 years and the liability period for 7.5 years. It will use EPC (Engineering, Procurement and Construction) contracts for road works. The repair and maintenance charges for 10 years will be borne by the state govt.