Maharashtra gets banks on board for road project
The Maharashtra government’s Rs 46,000 crore Nagpur-Mumbai Expressway project, touted as a game-changer of sorts, may finally see some headway after the state government acceded to some of the conditions put forth by some state-owned banks.
State officials have agreed to offer guarantees for the project, and has for the first time, decided to pledge a portion of its land as collateral with the banks for executing a road project.
Senior state government officials told ET that while banks had sought a “sovereign guarantee”, the state is willing to offer an “administrative guarantee” to the banks. According to Maharashtra State Road Development Corporation (MSRDC), which is implementing the project, they have sent a proposal to the state government seeking an approval for giving an administrative guarantee.
“While banks want a sovereign guarantee, we can’t do that. But we are ready to give an administrative guarantee,” said the official. An administrative guarantee is for a part of the loan unlike a sovereign guarantee, where one takes responsibility for the whole project.
The state government has also decided to mortgage a portion of the land with the state-owned banks as collateral.
Bank representatives told ET that the two conditions had been placed as they had suffered in the past while lending to such road projects. “We have also demanded that all the approvals, including environmental clearances, are in place for the entire 700-km stretch,” said a bank official who did not want to be identified.
The 700-km, 8-lane Mumbai-Nagpur Super Expressway project is being described as a game-changer. The project will have petroleum pipelines running along the length of the expressway to cater to industries and the state is also planning a number of industrial nodes along the length of the corridor.
The state believes that once the corridor is done, it will catapult Maharashtra over other states in the country. However, the corridor has been facing some thorny issues: farmers in many villages have refused to part with their land, and banks have been reluctant to fund the project until their conditions were met.