Funds crunch may hurt Chennai Metro expansion

By: | Updated: September 16, 2015 1:09 AM

With the nod from the Madras High Court, tunnelling work for the metro project can begin soon

After weeks of uncertainty and litigation on the future of the Chennai Metro Rail, the Madras High Court last week allowed Chennai Metro Rail Limited to call for fresh bids to undertake tunneling works and continue operations. But, differences between the Centre and the Tamil Nadu state government over funding could see the completion of the project being delayed further.

Chennai Metro, which began operations on June 29, experienced a crisis after one of the contractors pulled out of the joint venture.

In 2011, Gammon India along with its Russian joint venture partner Mosmetrostroy had won a contract worth Rs 1947 crore,to design and construct seven underground stations for Chennai Metro Rail.


However, Mosmetrostroy stopped tunneling operations over an 18-km underground stretch. It also walked out of the joint venture with Gammon India. Close to 90% of the work was completed on the Saidapet-Gemini stretch while 70% of work was done in the LIC-Thousand Lights phase when the Russian company stopped work.

The development forced Chennai Metro to terminate the contract and call for fresh bids, but Gammon India challenged that move in the Madras High Court. Last week the Madras High Court allowed Chennai Metro to go ahead with a new tender to choose a contractor for tunneling works.

Chennai Metro then engaged Afcons Infrastructure Ltd to complete the unfinished work. “ CMRL engaged another contractor for the balance works which has now been completed successfully”, a CMRL official said.

Though Chennai Metro has been allowed to call for fresh bids, the court has asked both the company and Gammon India to arbitrate the dispute. It did not immediately clarify whether Gammon India could place fresh bids.

Even as the legal tangle is resolved, the Central Government and the Tamil Nadu state government are having differences over funding for the extension of the project. The Chennai Metro Rail Limited, a joint venture of Government of India and Government of Tamil Nadu requires support on certain key policy issues from the Central government, besides funding.

At the centre of the dispute is the question of who is to fund the project expansion. The extension of corridor-I of Chennai Metro Rail Project up to Thiruvottriyur and Wimco Nagar, covering a distance of 9.051 km, at an estimated updated completion cost of Rs 2796 crore has been proposed to the Government of India for approval.

State government officials say they had sought an approval from the Ministry of Urban Development for additional funding for the expansion. “However, we were shocked to receive a letter dated 23.7.2015 from the Ministry that as the proposal represents a change of scope, the entire cost should be funded by the state government itself,” Tamil Nadu chief minister wrote in a letter to Prime Minister Narendra Modi.

The Tamil Nadu government has argued that it was not right to expect the state government to bear the cost while maintaining the Centre’s equity share in the project undiluted. “It violates the spirit of co-operative federalism. This is also totally contrary to the stand taken in the case of the extension proposals of other Metro railways,” Jayalalithaa said in her communication.

Meanwhile, the Chennai Metro, despite having been in operation for over two months, has not attracted much attention because the operational stretch is insignificant for daily commuters. The operational line of 10 km that connects Koyambedu and Alandur does not cover areas of major industrial or commercial significance and stands isolated in the scheme of things until the entire R14, 600 crore project is completed.

On weekdays, around 40,000 passengers commute on the stretch, while on the weekends this goes up to 1-2 lakh passengers, mainly because people want to experience the new Metro Rail. But the passenger inflow on the weekend is also experiencing a decrease.

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