Delhi Metro Rail Corporation (DMRC) chief Ellatuvalapil Sreedharan may have sparked off a nation-wide debate last year on whether allowing commercial exploitation of land by private metro rail developers as in the Hyderabad Metro Rail project was akin to ?selling of family silver? and is often credited with blowing the lid on the Maytas scam, but the Comptroller and Auditor General (CAG) of India is not too pleased with DMRC for its land use policy or administrative system.
In a performance audit for 2008, the CAG has slammed DMRC for neither ?maintaining location and station-wise data of land used for the project and for property development? nor following a proper accounting or utilisation of the revenue from land use.
DMRC can raise 6% of the estimated project cost, over and above the equity and debt finance, through property development, like leasing of shops and restaurants within station buildings and by letting out land for residential and commercial uses to private developers.
But the CAG in its audit found that although the company acquired 32.38 lakh square metres (sqm) of land for phase I of the metro project, but it failed to keep an account of land used for the project and property development. More importantly, the CAG noted, ?In nine locations, it was observed that total land acquired was 6.42 lakh sqm, which was in excess of the project requirement by 14% to 354%.?
DMRC in its reply said the land assessment was on the basis of survey while preparing the project report and some extra land had to be acquired depending on local conditions, and also to meet the needs of future growth of traffic. Also it was not always possible to divide the land because property development was generally carried out in addition to operations on most of the lands acquired for the project.
The audit has revealed that DMRC did not remit the surplus revenue from land exploitation estimated at over Rs 300 crore to the Centre.
Under its financing plan, the metro rail corporation can retain Rs 300 crore of the revenue generated from property development, but it had to transfer any surplus amount to the Consolidated Fund of India or reduce it from the budgetary support approved as equity of the project. The CAG in its report noted, ?As the company has realised revenue of Rs 631.71 crore up to March 31 2008 from property development for Phase I, the surplus revenue should flow back to the Consolidated Fund of India.?
Interestingly, the CAG has also rapped the DMRC on another issue as well that its chief had taken up against the Hyderabad metro?administrative control. The audit notes that under ?the unique administrative model?, ?the company has not been put under the direct control of any administrative ministry.?
?The administrative model, however, presents ambiguity relating to the issues of coordination and control by the executive government and the proper forum for legislative accountability,? the CAG has noted, adding, ?The novel experiment of putting both Central and State Governments on equal footing gave an unprecedented level of autonomy and freedom to the company.?
Further, the CAG has said that in violation of good corporate governance plans, DMRC does not have independent directors on its boards. It has also not prepared a corporate plan to chart out its goals and strategies for business development, diversification, technology upgrading and customer satisfaction.
The CAG has also raised issues regarding ridership of the metro as well as its system of providing contracts. ?The highest daily average ridership attained by the Company was 21% of the original projections and 29% of the revised figure. The shortfall in ridership was mainly due to higher fare structure, lack of proper connectivity and lack of feeder bus system,? the audit said.
Going gets tougher
•The CAG has slammed DMRC for neither ?maintaining location and station-wise data of land used for the project and for property development? nor following a proper accounting or utilisation of the revenue from land use
• In nine locations, it was observed that total land acquired was
6.42 lakh sq metre, which was in excess of the project requirement by 14% to 354%
• DMRC did not remit the surplus revenue from land exploitation estimated at over Rs 300 crore to the Centre
• Under ?the unique administrative model?, the company has not been put under the direct control of any administrative ministry
•DMRC does not have independent directors on its boards. It has also not prepared a corporate plan to chart out its goals and strategies for business development, diversification, upgrading of technology, and customer satisfaction