Metro: whose line is it anyway?

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Metro: Whose line is it anyway?

New Delhi, Oct 2 : After Delhi, Mumbai and Hyderabad, six more cities—Chennai, Kochi, Bangalore, Ahmedabad, Chandigarh and Pune—are expected to launch metro rail systems in the near future. But the stir created by Delhi Metro Rail Corporation (DMRC) chief Ellatuvalapil Sreedharan’s missive to the Centre over perceived risks stemming from the Hyderabad project being awarded to a private developer could throw a spanner in the works.

With an estimated $13.5 billion required to construct the five metro rail systems in Delhi, Bangalore, Kolkata, Hyderabad and Mumbai, the question of how these projects should be financed has become a bone of contention between the urban development ministry (the nodal department for metro projects) and the Planning Commission (which advises the government on infrastructure projects).

The differences centre on whether or not private players roped in for metro projects should be allowed to develop real estate along metro lines to help pay for the overall project and keep passenger costs low. Though all concerned, including the finance ministry, agree that the ultimate decision lies in the hands of the respective state governments, the urban development ministry seems to favour a Centre-state partnership as that would ensure better service quality. It also feels that lack of resources should not be the only consideration.

While Delhi, Bangalore and Kolkata are being taken up on a joint-ownership pattern with the Centre and concerned state as project promoters, the metro projects in Mumbai and Hyderabad have been taken up on a PPP basis. Chennai is also hoping to go the DMRC way. But the Planning Commission is pushing to award the project to a private bidder and is making a similar case for Kochi.

“In my view, the Centre and states should not get into the running of metro rail projects because they will not be able to handle the liabilities. However, the metro being an urban amenity, the Centre should extend some funds through the viability gap funding route,” Planning Commission deputy chairman Montek Singh Ahluwalia told FE.

The commission, which has framed the model concession agreement (MCA) for the Mumbai and Hyderabad metro projects—the only two to have so far been auctioned out to private players—feels the government’s resources are not sufficient to fund all infrastructure projects and actively makes a case for awarding projects to private bidders. In such cases, real estate development by the concessionaire helps make the project viable.