Nhava Sheva fraud

Nhava Sheva Transharbour Sea Link- Fraud explained

We all expect and accept corruption in the large Infrastructure projects. But this project gives us the smoking gun;- where we have proof of the brazen manner in which a fraud is being committed.
Here are the facts mostly unearthed using Right to Information. My enquiries started in September 2007. The Supreme Court had ruled that the disqualification of Anil Ambani’s Company for the bidding of the Mumbai Trans Harbour Sea Link Project (MTHL) was bad and that ‘the decision to exclude REL/HECL is arbitrary, whimsical and unreasonable’.
I was curious to know some details about this project, which has been said to be around 3000 crores, and asked for copies of the minutes of meeting at which the decision to disqualify REL/HECL was taken. When I received the minutes, they revealed some really disturbing matters.
1. Anil Ambani’s REL with Hyundai was disqualified on grounds of financial inadequacy! The discussions show that REL itself had adequate financial standing to qualify.
2. Crisil was involved in the evaluation of the bids. The meeting brings out the fact that Crisil was a consultant to Ms. Seaking which was linked with Mukesh Ambani’s Reliance group. Crisil qualified Seaking, and disqualified Anil Ambani’s group on the grounds of financial inadequacy! The issue of conflict of interests was raised at the meeting and forgotten!
3. Another very curious aspect was that another Company China Harbour was disqualified on what appeared to me to be absurd reasons! Further RTI queries revealed that the Company had had given proof of having made a longer bridge 32.5km bridge in China, whereas the Nhava Sheva bridge is just 22 km. It had made the 32.5 km bridge for just 851 crores, whereas MSRDC’s estimate for the Nhava Sheva 22 km. was over 2000 crores hence it was not allowed to bid!
(Note: Indian contractors have managed to jack up the price of the 5.6 km. Sealink to over 1600 crores, where China Harbour is the main subcontractor.)
Consequent to the Supreme Court’s order Anil Ambani was allowed to quote for this BOT project. When the bids were opened, the Anil Ambani Company had offered to build the bridge, recover its costs through tolls and then hand over the bridge to the State in nearly 10 years, whereas the Mukesh Ambani group had asked for revenues for over 75 years. Now the State has decided not to give the project to the Anil Ambani company, but to build it itself! This is obviously because there is not enough padding in his offer
to pay the huge bribes now. The State calims that the offer should be about 44 years to recover the revenue. I have asked for details of the minutes of meetings at MSRDC, but a simple calculation is very revealing. The assumptions by the bidders have been for 50000 vehicles per day at Rs.150/ per trip. A simple calculation based on this shows that this would lead to a revenue of Rs. 75 lacs per day or about Rs. 270 crores each year.
Based on a return of Rs.270 crores per year and a rate of 6%, 8% and 10% returns, the Net present Value will be as shown in the table below:

Interest Rate	10 years	44 years	75 years
6%	1987	4173	4443	NPV in crores
8%	1812	3269	3364	NPV
10%	1659	2663	2698	NPV
	Anil’offer	MRDCestimate	Mukesh offer

This shows that the Mukesh Ambani estimate is uncannily close to the MSRDC’s estimate, whereas the Anil Ambani group is estimating the cost as about half,-about 1700 to 2000 crores. The difference of 10 years, 44 years and 75 years actually is much lower the moment you factor the NPV. This is almost like the equated instalments paid by in any normal loan transaction with constant repayments. The State is refusing a reasonable offer made by Anil Ambani on the grounds that it is too low! Anil Ambani is also playing along to get some humour the administration. The State now says it will build the bridge itself and will levy an impact fee-an increased tax,-to pay for the bribes?
In brief:
1. It appears that initially the project was designed to be given to the Mukesh Ambani group with over 50% being reserved for ‘education’-a la Enron.
2. To achieve this others like China Harbour and the Anil Ambani group were disqualified by a rigged process.
3. Incidentally China Harbour has built a 32.5 km seabridge in China for 851 crores and is the main subcontractor for the Worli-Bandra sealink. Anil Ambani wanting to best his elder brother played the spoilsport and bid about 50% -which did not leave much for bribes.
4. In a weird development, the State says Anil Ambani’s bid is too low and Mukesh Ambani’s bid too high, hence it will undertake the project. After four years of proposing a BOT, the State gives no explanation for this turnaround. Anil Ambani has obviously been pacified in some manner. Anil Ambani has made a reasonable offer, and the State has qualified his consortium with Hyundai. China Harbour was disqualified for the ability to build a bridge of 32.5 km for 851 crores, and after the bidding Anil Ambani’s group is not awarded the project because we will get it at a reasonable cost-translating into roughly 2000 crores.
5. Now the State will decide to build this and the current Government will award it for around 6000 to 7000 crores. Next year when the political dispensation will probably change the new ministry will hike it maybe 10000 crores. Do we remember ENRON?
Citizens, business houses and others must protest strongly and make the Government act in Public interest. The methodology being adopted has brazen CORRUPTION written all over, and offers us an opportunity to reverse it.

shailesh gandhi