Metro policy planned on lines of DMRC pattern

The government is planning to come up with a detailed Metro Rail policy modelled on the lines of the funding pattern....

The government is planning to come up with a detailed Metro Rail policy modelled on the lines of the funding pattern of Delhi Metro Rail Corporation,which has proven to be a workable model.

The need for the new policy arose as the government found that the Viability Gap Funding (VGF) in which the centre funds 20 per cent of the total project cost and Public Private Partnership (PPP) models have failed to take off on expected lines. The policy will contain checks to prevent private developers from engaging in large-scale commercial development of property or assets which are primarily state-owned.

The policy,which is being deliberated upon by a committee of secretaries led by the cabinet secretary slated to meet in August this year,may be finalised in a couple of months. The urban development ministry is of the view that if possible,a PPP model should be explored. But if a PPP model is not possible and the citys requirements justify development of a metro rail then the DMRC model may be followed. The DMRC model may be followed if the resources are available,but states should not insist on a PPP model, a top government official told The Indian Express.

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With an oblique reference to the Hyderabad Metro project,which failed to achieve financial closure after a negative grant was quoted by MaytasInfra-led consortium,the official said that a metro project should not be turned into a property development project. Property development or commercial exploitation of real estate can not be on such a huge scale. The project may have a provision for commercial real estate but that will depend on the characteristics of individual cities, the official said.

The Maytas-led consortium had won the bid for Rs 11,892 crore Hyderabad Metro project based on a model concession agreement by quoting a negative grant of Rs 30,311 crore over 34 years. The consortium was expected to leverage the 18-20 lakh square feet of real estate,available in and around Metro rail stations,for commercial development and ensure a sizable revenue stream. However,following the discovery of the Satyam fraud,the project could not see financial closure.

Similarly,other metro projects in a PPP mode like Mumbai Metro saw numerous difficulties after Reliance Energy won the bid. Finally,the centre had to step in with a VGF of Rs 471 crore approved recently,while the state government will pitch in with Rs 179 crore. Chennai,Kolkata and Bangalore have followed the DMRC model and the Kochi metro project will soon be taken up by the urban development ministry in consultation with other stakeholders.