BOT seriously

There has been much concern, including in these pages, about the Delhi Metro Rail Corporation actions regarding the Hyderabad Metro.

There has been much concern, including in these pages, about the Delhi Metro Rail Corporation (DMRC)’s actions regarding the Hyderabad Metro. Some of it is wrong; to set the facts straight first, I must clarify that at no time had I stated that “Build, Operate, Transfer” or BOT model is not going to work for Hyderabad Metro. DMRC prepared detailed project reports (DPRs) for all the metros planned across the country, including for Hyderabad. For none of those cities was the BOT model recommended — only for the Hyderabad Metro. We still stand by our recommendation. There were specific reasons why the BOT model was expected to succeed in Hyderabad: the low cost of construction (since no tunnelling is involved), and the huge ridership expected. Even then, we had expected a gap: 40 per cent of the cost would need to be funded to make the BOT model work.

What transpired later was that the Government of Andhra Pradesh offered 269 acres of prime land in the city to the BOT operator, which would enable him to exploit more than 20 million square feet of commercial space. DMRC had never recommended this nor were we a party to this. This is what I had termed as “selling the family silver”. When we discovered that the Metro lines were altered and extended (DMRC had objected to this) to areas where the successful BOT operator had extensive private land holdings — a Metro connection would enhance the market value of these plots four or five times — we began to feel that the tendering process was clearly not transparent enough and we withdrew from our role as prime consultants. In this connection, I must put on record that DMRC was not involved in the pre-qualification of tenderers nor in the selection of the BOT operator.

What I had mentioned in my letter to the Planning Commission was that these alterations to the DPR which benefited a particular party may lead to a political scandal later. We had seen in this country, whenever there is a change of government, the next government rakes up many issues pertaining to the previous government’s regime. This has happened in Kerala, Karnataka, Tamil Nadu, UP, and elsewhere: it might happen in Hyderabad also.

Hyderabad Metro has succeeded in the BOT experiment solely because of large areas of prime land made available to the concessionaire for commercial

exploitation and because this particular concessionaire grossly benefited privately even otherwise. None of the other cities has such prime land available to be offered as sweetener to a BOT operator. Therefore, what I had written to the Planning Commission was that the success of BOT experiment in Hyderabad should not be cited as an argument for ensuring that all the other metros are constructed on the BOT model. Unfortunately, these words of mine have been distorted to say that Hyderabad Metro is not going to work on BOT model.

Metros are highly capital-intensive. If the fare levels have to be kept low so as to be affordable to the common citizens, they have to be offered many incentives to keep down the cost of construction. Otherwise it would serve as a massive financial burden to the government. If the Delhi Metro is making a profit and is not a burden on the two governments involved, it is only because of such concessions, concessions extended consciously by the Union Cabinet.. Why should the Planning Commission or any other agency grudge such concessions being extended to a fellow government agency like DMRC so as to make it financially viable?

It is seen that if a metro is constructed by a private concessionaire the cost of such a system will be at least 25 to 30 per cent more than if it is done on the DMRC model. Further, the country must aim at standardisation and indigenisation, which would lead to a significant reduction in cost. This cannot be achieved if each metro is executed by a private agency. I have, therefore, no hesitation in strongly advocating that other metros in the country should be taken up only on the model successfully used by the DMRC.

The writer heads the Delhi Metro Rail Corporation

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