Fresh concern over subsidy in Tunnel Rd project

OF the array of concerns associated with the controversial North-South Tunnel Road project, a new one has now emerged that the Tunnel Road Detailed Project Report (DPR) is recommending subsidies beyond what is needed for viability.

- INDRA S @Bengaluru

The draft DPR (September 2024, Volume 1) stated that the entire project is viable with a 30% subsidy, ensuring an internal rate of return (IRR) (an estimate of the profitability of investments), which in this project is a minimum 15%, is met. However, the draft concession agreement for the Tunnel Road project stated that the state government will cover 40% of the project cost. But the draft DPR showed that the project is already financially viable with just 30% support and meets the profitability requirements. This has raised questions, because if at a 30% subsidy, the builders' profits would meet the required targets, why is the government paying 40%?