Press Release - July 02, 2002
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)