The third phase of the Delhi Metro, expected to be completed by March 2016, may see a cost escalation by over Rs 10,000 crore at around Rs 45,439 crore, according to primary funding and advisory partner Japan International Cooperation Agency (JICA).
The rise in costs is largely due to changes made in some corridors in favour of underground sections from elevated lines and a sharp increase in material costs.
“The total project cost is expected to be around 720 billion yen (Rs 45,439 crore), over half of which will be covered by the JICA. Currently disbursal of 128 billion yen is on, and we hope the second tranche of 120-130 billion will be committed within this financial year. The third tranche will come after that,” a JICA official said.
“The costs have increased because of higher material costs. Also, the cost of underground section is much higher. And a few portions had to be changed from elevated to underground”.
A DMRC spokesperson did not not respond to an emailed questionnaire despite several reminders.
JICA, which has already provided a 128 billion yen (Rs 8,072 crore) soft loan to the Delhi Metro Phase III project, is likely to increase its funding by a further 250 billion yen (Rs 15,775 crore) divided into two equal tranches, two of its officials told FE.
That would increase JICA's exposure to the project by 29%, from Rs 18,567 crore under the original estimates to Rs 23,884 crore.
“The official request from the government of India is yet to be issued. Once the official request is issued, we will immediately start the official discussion, and the first (tranche of 250 billion yen loan) may be committed in FY14 or FY15 subject to the approval from government of Japan. The timing of commitment of the second (tranche) depends on the progress of the project,” the JICA official said.
Under the bilateral development assistance programme, JICA has provided over half the funds for both Phase I & II of the Delhi Metro, and is expected to do the same for the Phase III as well. For Delhi Metro Phase I & II combined, JICA has provided soft loans of 374.7 billion yen (Rs 236,75crore) with a 30-year repayment period and interest rates varying between 1.2% and 2.4%.
However, the Japanese government agency is not likely to continue the assistance programme for Delhi Metro after the Phase III.
The total expected loan size of 378 billion yen for the Phase III is higher than the first two phases combined also because the Phase III alone is 136 km in total length, while Phase I & II combined were about 190 km.
JICA, which has the largest exposure to India in all its development finance programmes, has lent 3.7 trillion yen to the country since the start of the relationship in 1958 and 2012. The agency, which is also financing urban metro rail projects in Mumbai, Bangalore, Chennai and Kolkata apart from energy and water treatment plants, saw its loan commitments touch a peak of 349 billion yen in FY13.