MSRDC, Reliance Infrastructure-led consortium exit Bandra-Worli Sea Link project

MUMBAI: The Maharashtra State Road Development Corporation ( MSRDC) has finally agreed to terminate the contract with Reliance Infrastructure-led consortium, putting an end to the proposed extension of Mumbai’s iconic Bandra-Worli Sea Link ( BWSL).

MSRDC and RInfra have mutually decided to exit from this project after it was agreed that RInfra would get back its bank guarantee, said a state government minister who didn’t wish to be named. The MSRDC board is meeting on Thursday to finalise this decision which will be forwarded to the cabinet sub-committee for its final approval.

Both parties have reached an agreement on the termination of the contract and RInfra will be returned its bank guarantee of Rs 105 crore, said a senior MSRDC official. There was a lingering dispute between MSRDC and RInfra over how to take the project forward. And, finally, they held two meetings in July to discuss the cost of termination and the possible exit option.

Both parties had jointly appointed justice BP Singh as the mediator to suggest a way out of this contract. Justice Singh’s report made it clear that the Maharashtra government had not been able to execute the state support agreement as was agreed upon when the bid was accepted.

As per the terms and conditions of the project agreement, the state was supposed to guarantee the financial share – Rs 1,392 crore – as promised by MSRDC.

The government was to give a ROI (return on investments) to the developers in case of termination of contract during the construction period. However, the government refused to extend any such support to MSRDC or the developer.

ET had earlier reported that after the Attorney General of India endorsed justice Singh’s mediation report suggesting that the sea link extension plan should be dropped, it was all but over for the much-hyped project. On Thursday, MSRDC board is likely to suggest that the extension of the sea link should be financed through securitising the existing sea link, said people familiar with the matter.

But this option is difficult to implement because neither the state nor MSRDC is in a position to provide any financial support.