Bangalore Metro Rail Corporation (BMRCL), a joint venture between the state and the Centre, is planning to raise Rs 12,000 crore to fund the second phase of the metro project. It intends to raise the funds from a mix of domestic and overseas financial institutions and also through bonds, a top official of BMRCL said.
“We have commenced civil work for the second phase of Bangalore metro (Namma Metro), which is estimated to cost Rs 26,450 crore. Both the Centre and state government will contribute 50% of the project cost through equity, while the remaining 50% will be met through borrowings,” Pradeep Singh Kharola, managing director, BMRCL said.
Phase-2 of the project involves extensions of the current reaches as well as laying two new lines between RV Road and Bommasandra and between Gottigere and Nagawara. Recently, BMRCL signed an agreement with French agency Agence Francaise De Development (AfD) for Rs 1,500 crore loan. In the first phase, AfD had lent Rs 800 crore to BMRCL.
“We are in talks with KfW of Germany and Japan International Cooperation Agency (JICA) to borrow loans,” Kharola said. “We are also in talks with AfD for raising funds at sovereign level. As the interest rate offered to sovereign funding is low, we are exploring this option,” he said.
BMRCL is also exploring an option to borrow from domestic banks and financial institutions. “With the interest rates coming down in the recent days, we are exploring this option. For example, the base rate of SBI has come down to 9.5% compared to over 10.5% when we started looking for funds for Phase-1 a few years ago,” Kharola said.
The BMRCL is also looking for around Rs 1,000 crore by floating metro bonds. Apart from equity contribution, both the JV partners will provide subordinate debt for the project, he added.
The corporation would spend around Rs 5,000 crore on land acquisition alone for the second phase of the project, which is double when compared to the first phase. It has started acquiring private properties on Mysore Road, Kanakapura and Whitefield areas for the extension of east-west and north-south corridors, Kharola said.
For the first phase of metro, BMRCL had raised Rs 6,500 crore from both domestic and foreign institutions. The total project cost in the first phase has gone up to Rs 13,000 crore. The 42.3-km first phase is likely to be completed and operationalised by June 2016. The 72-km second phase is projected to take five years for completion.
“We have already awarded contract for construction on the Mysuru Road-Kengeri extension to IL&FS. The acquisition of private properties is going on smoothly as compared to first phase,” he said.
Currently, BMRCL is operating 27 km out of 42 km in the first phase and an estimated 50,000 passengers are travelling everyday. The corporation is earning around Rs 10 lakh per day. “Our revenues currently are barely sufficient to meet energy charges. We need close to Rs 2 crore per day to pay towards the interest portion to service our borrowings,” Kharola added.