[sustran] Re: SHELVE BMIC - The "Enron" Of Road Development- Press Release - July 04, 2002

[kisan mehta]

Dear Sustran Colleagues and Leo,

With reference to your contention in the press note dated 4 July "SHELVE BMIC - The "Enron" Of Road Development" that the 
Bangalore Mysore Highway should be shelved and instead the Government of Karnataka should take up the doubling of railway 
track between Bangalore and Mysore is well appreciated. 

The expansion of Bangalore Mysore Highway in the manner 
proposed by spending a huge amount is not only disastrous but hazardous.  Providing unpaved side space beyond the paved four 
lane carriageway under any pretext is an open and permanent 
invitation for accidents. Non-motorised traffic and pedestrians 
will be the victims. Pedestrians form 81% of the number of 
persons killed on roads in Mumbai which has the highest road 
fatality.rate in the world. In any case, no road project can be 
financially viable and become a burden on the poor. 
 
Doubling of the railway track existing and in use for generations 
can be sustainable and affordable Many more people can use.

If they persist on the road construction, they be made to build 
raised pavements on the space beyond carriageway width as our 
drivers are habituated and are encouraged by authorities to cut and overtake from left and right. 

Mumbai Pune Highway- though only 50% of the length is a
highway has extremely high accident rate so much so that sober
drivers are frightened to take the highway.  There is a toll for
use of road. Toll collected hardly covers interest costs on Rs 
2,000 crores (Rs 20 billion) spent. Total burden falls on the 
people not having vehicles.   The state owned Maharashtra State 
Road Development Corporation which borrowed at very high rate 
is ractically broke.  Developing of townships on way also provided 
in the Mumbai Pune Highway can never by taken up because of 
serious financial stringency faced by the Government.  It has cut 
down budget allocations on education and health. 

If the project violates the Reserve Bank guidelines, it would be worthwhile taking up the matter with the Bank and Planning
Commission. The Commission is concerned about the rising
public debt of the states. 

Institutions providing loan should be given the correct picture 
and ridiculed. ADB is set up for poverty amelioration and not 
for widening the gap between the rich and the poor.  HDFC 
should be exposed and publicly censured.

You know construction of railway facility comes under
the Railway Ministry which would not take up doubling
on its own. The State Govt can finance the Rlys for the
doubling.  Maharashtra Govt financed the total cost of a
new railway line about 20 years ago.  Konkan Railway
is an independent authority. Now the Maharashtra Govt and
Indian Railways have set up an joint stock company on 50:50
basis to support suburban railway expansion. So we should
probably pursue that approach.

It is necessary to create awareness on the road expansion folly.  
You have referred to the Enron case. You are aware that many 
more and larger scans have taken place recently.  

Priya Salvi and Kisan Mehta
Save Bombay Committee
********************************

----- Original Message from ESG
  Press Release - July 04, 2002

  SHELVE BMIC - The "Enron" Of Road Development

  GoK should Immediately Implement the Expansion of SH-17 and Doubling of Railway

  According to recent press reports, the Government of Karnataka (GoK) has opted to expand the existing Bangalore-Mysore highway (State Highway-17) from its present 2 lanes, to a 4-lane highway at the cost of Rs. 331 crores. Karnataka Road Development Corporation (KRDCL) officials have confirmed that the expansion project has the following specifications: 2-lanes measuring 7 metres wide in either direction; a 2 metre median strip; shoulders and embankments on either side. The total "right of way" would be 45 metres. Although the width of the road and median will come to only 16 metres, it is important to note that the shoulders will allow ease of passage to pedestrians, farmers, bullock carts and the like, thus mitigating accidents and ensuring a smoother flow of traffic. Total land acquisition between Bangalore and Mysore would be only 65 acres.

  It is well established that the majority of accidents on the existing road are primarily due to bends that are hard to negotiate. The planned expansion, according to KRDCL officials will ensure that road geometry is also addressed and the expanded road will be straighter, safer and easier to travel. Most importantly it would require negligible acquisition of agricultural land and marginal acquisition of existing commercial zones to prevent "ribbon development". A combination of this project and the doubling of the railway line between Bangalore and Mysore (approx. a distance of 140 kms.) will be viable economically, and more acceptable environmentally and socially. In comparison to other existing proposals to develop transport corridors between the two cities, expansion of the existing highway is far more affordable.

  Considering this situation, the question looms as to why the Bangalore-Mysore Infrastructure Corridor Project (BMICP) is still being considered. According to reports, the Asian Development Bank has assessed that the traffic volume between Bangalore and Mysore does not justify an expressway of the type proposed in BMICP and is significantly less than international standards for expressways. Of the options available then, to improve safe traffic flow between Bangalore and Mysore, BMICP has the greatest adverse impact, the highest financial outlay, and the most uncertain returns. Not only will it involve a 6-lane expressway which apparently requires over 7000 acres of land, but would demand the acquisition of over 14000 acres of land for 5 gated townships developed clearly to extract real estate value, so as to ensure the expressway becomes financially viable! It is very doubtful if the real estate projections of the BMICP are believable given that several similar housing, recreational and corporate facility developments in and around Bangalore have failed. In other words there is simply no demand for expensive, exclusive even, housing developments between Bangalore and Mysore. Most importantly this extravagant proposal costs over Rs. 2,000 crores. Nandi Infrastructure Corridor Enterprise, promoters of BMICP, has also failed to comply with a string of compliance conditions in the clearance issued by the Karnataka State Pollution Control Board and the Ministry of Environment and Forests. 

  Keeping this in view, we must call into question the reported commitment of HUDCO to both the expansion of SH-17 and the in-principle support to BMICP. Even if HUDCO had all the money to fund both projects, the moot point would be if it were at all required to have two new highways between Bangalore and Mysore. Such mockery of "development" cannot be sustained in the claim to delivering the objectives of wider public interest. ICICI and the consortium of financiers must consequently withdraw financial support to BMICP, as with the expansion proposal and the doubling of the railway line, the BMICP would be the "Enron" of Road Development. The Reserve Bank of India is clear that projects such as BMICP should not be easily supported by financial institutions and has even released a Circular No. IECD No. /08.12.01/2001-02 dated 20 February 2002, extracts from which state that:

  "In respect of infrastructure projects, where financing is by way of term loans or investment in bonds issued by government owned entities, banks/Financial Institutions should undertake due diligence on the viability and bankability of such projects to ensure efficient utilization of resources and creditworthiness of the projects financed. Banks should also ensure that the individual components of financing and returns on the project are well defined and assessed. Lending/investment decisions in such cases should be based solely on commercial judgment of banks/Financial Institutions. There should be no compromise on proper credit appraisal and close monitoring of the projects financed and banks should ensure that only projects that are intrinsically viable are financed. State Government guarantees may not be taken as a substitute for satisfactory credit appraisal and such appraisal requirements should not be diluted on the basis of any reported arrangement with the Reserve Bank of India or any bank for regular standing instructions/periodic payment instructions for servicing the loans/bonds."

  The BMIC project has repeatedly claimed that project financing is based on GoK guarantees. In view of the RBI circular, it would seem the GoK is supporting an economic disaster against RBI advice, to say the least.

  Keeping the expansion of SH-17 in view, we urge the GoK to stop investing wastefully its time and resource in being a part of the BMICP, and focus on assuring the quick implementation of the SH-17 expansion. In addition, doubling the existing railway line alongside, at a reported cost of Rs. 276 crores would help decongest Bangalore and develop Mysore while boosting the economy of Mandya and Chamrajnagar districts, thus reducing regional imbalances. Furthermore, reviving the shelved proposal of developing housing at important railway stations, will surely meet the growing demands of providing all sections of society affordable housing and safe travel options. This way Bangalore can be protected from the ugly sprawl as proposed in the BMICP. 



  Leo F. Saldanha Nagini Prasad Rajmohan Pillai

  Coordinator -ESG Campaigns Coordinator Coordinator (Infrastructure Finance Research)

  For more information on the BMICP please visit http://www.indiatogether.org/campaigns/bmic

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