MUMBAI: The cash-strapped State government has given its nod to stand guarantee for Rs 13,000 crore  interim loan for the Mumbai-Nagpur Expressway, which may prove a great liability for the state.

The 701-km Maharashtra Samruddhi Mahamarg, that will connect Mumbai to Nagpur by road, is one of the pet projects of Chief Minister Devendra Fadnavis. The Rs 55,335 crore project is being implemented by a Special Purpose Vehicle (SPV) i.e. the Mumbai-Nagpur Super Communication Expressway, in which Maharashtra State Road Development Corporation (MSRDC) holds a majority stake.

Nagpur Mumbai Super Communication Expressway is the special propose vehicle (SPV) for the project. The SPV is raising funds of Rs 13,000 crore from Life Insurance Corporation (LIC) of India, HUDCO, Canara Bank, and Punjab National Bank. The State government will stand guarantee for the loan and it’s interest.

According to the condition of the guarantee, the government will not be liable to pay penalty  in case the project is delayed. 

Finance companies have to take security of the SPV’s property against the repayment of the loan and should check after every three months. Even finance companies should not give loan more the amount as the government stand as guarantee.

The SPV will take loan from finance companies and the government will stand guarantee for this. The loan should be used only for the purpose, which has been specified. The SPV have to repay the earlier interim loan of Rs 4,000 crore from the this new loan. 

The property or infrastructure created through the loan amount will be mortgaged with the State government and the Maharashtra State Road Development Corporation (MSRDC) will be responsible for this.

MSRDC has to take care that the State government should not be liable for the loan. 

The SPV has to convert the guarantee value of the loan into share capital after every six months. If the company fails to do so, the government will charge interest at the rate of 16 per cent for first three months and later, the rate of interest will be 25 per cent.