Tunnel road a ‘real estate project in disguise’, contend citizen groups

They have alleged that ancillary revenue in the form of real estate is being given “free” to the concessionaire, which they estimate could be as high as ₹30,000 crore for the entire concession period

Updated - August 10, 2026 03:05 pm IST - Bengaluru

Citizen groups term the tunnel road project a “vanity infrastructure that repeats flyover failures”. | Photo Credit: K. MURALI KUMAR

Citizens opposing the Congress government’s ambitious tunnel road project have termed it “a real estate project in disguise.” The citizens’ group Bengaluru Praja Vedike (BPV), which is at the forefront of the campaign against the project, has written to all the city’s MLAs and MPs, urging them to reject it.

In a letter addressed to them, the group has termed it a “vanity infrastructure that repeats flyover failures” and urged them to embrace “evidence-based planning”. They have alleged that ancillary revenue in the form of real estate is being given “free” to the concessionaire, which they estimate could be as high as ₹30,000 crore for the entire concession period.

Coming ahead of the Monsoon Session of the Karnataka legislature, starting on August 13, this is expected to give the Opposition further ammunition, keen to put Chief Minister D.K. Shivakumar in a tight spot.

The draft concession agreement shows that the concessionaire is required to build intermodal hubs at the vertical shaft points to create parking spaces. These will come up at five key junctions: Hebbal, Palace Grounds/Mehkri Circle, Race Course, Lalbagh and Silk Board. A total of 6.13 acres of land at these locations will be handed over by the government to the concessionaire.

Documents show that the intermodal hubs will be five-floor plazas, comprising a platform level, a services floor, a car parking floor, and two floors for retail space. Bengaluru Smart Infrastructure Ltd. (B-SMILE) estimates that these hubs could generate annual revenues of ₹250 crore to ₹300 crore for the concessionaire. The draft concession agreement states that this revenue, termed “ancillary revenue”, “will not be included in the calculations for review of the concession period”. The concession period is 30 years, extendable up to 40 years.

However, the ancillary revenue will be much higher, contend citizen groups. The same draft concession agreement also noted, “With respect to the retail spaces, a maximum FSI of 5 is permitted for development for the Intermodal Hubs above the surface (being Transit Oriented Development).”

This means the intermodal hubs need not be limited to five-floor buildings, but could also be developed as high-rises, creating greater commercial real estate opportunities, they contend.

“This is nothing but a free gift to private real estate developers to build on valuable prime central Bengaluru locations up to FSI 5. Conservative estimates put the real estate revenues upwards of ₹30,000 Crore during the concession period,” the letter argued.

“If the ancillary revenue is considered in calculating Total Concession Value (TCV) of the project, we can probably have the tunnel roads not tolled at all. The tunnel road project clearly has a big, but hidden real estate component, and may go down the road of NICE Road, embroiled in similar controversies over the years,” said Satya Arikutharam, an independent urban mobility expert.

B.S. Parhlad, Technical Director, B-SMILE, said ancillary revenue was an incentive provided by the government to attract firms to build the tunnel roads and was not illegal. B-SMILE documents show that the arrangement is modelled on similar agreements with concessionaires by the Port Authority of New York and New Jersey and the New York State Thruway Authority. The State government has already raised a ₹19,000-crore loan for Viability Gap Funding (VGF), amounting to 40% of the project cost of the Hebbal-Silk Board North-South Tunnel Road. Incentives in the form of ancillary revenue will be over and above this.

Published - August 10, 2026 06:01 am IST

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