Bangalore Metro moves closer to reality

Bangalore Metro moves closer to reality

The State government expects the work on the prestigious project to begin by April next.
Deccan Herald

The proposed Bangalore Metro took a step forward towards becoming a reality, with the pre-Public Investment Board meeting approving the Rs 6,200-crore project.

The pre-PIB decided last week to forward the project to the high-level PIB, headed by the expenditure secretary. The PIB is likely to meet in the first week of January after which the proposal would be forwarded to the Cabinet Committee on Economic Affairs for final clearance.

Speaking to Deccan Herald after interactions with Central officials, Bangalore Mass Rapid Transit Limited (BMRTL) Managing Director K N Shrivastava expressed confidence that the Karnataka government would get all clearances and agreements by February so that the project work starts sometime in April.

As for the crucial issue of finances, Mr Shrivastava said several Indian financial institutions (FIs) have come forward to lend up to Rs 3,400 crore to the project. However, the BMRTL has planned to raise at least 50 per cent of loan from the Japanese Bank for International Co-operation (JBIC) and has filed an application before the Union finance ministry in this regard.

The JBIC loan would be available to the State government at an effective interest rate of 6.3 per cent, while that of the FIs at 8.5 to 9 per cent. Besides, for JBIC loan, there will be a moratorium of 10 years, while the repayment period will be 30 years.

The Karnataka government will invest Rs 1,800 crore in the project and the Union government Rs 1,277 crore.

The State government has already collected about Rs 750 crore out of the infrastructure cess it is levying. “Of this amount, BMRTL already has Rs 350 crore which it can initially utilise,” the MD pointed out. For the next two years, the Centre is likely to allocate the Rs 170 crore to the project. Financial closure will be signed once the process for loans are through.

The Bangalore Metro will be made a special purpose vehicle (SPV) to implement the project through a joint venture company between the Karnataka and Union governments.

The Union urban development secretary will be its chairman and MD of BMRTL will be MD of the SPV. The construction of the project will be done by the SPV which will have the companies constructing the Delhi Metro as consultants. Even Mr E Sreedharan, the man behind the Delhi Metro (and Konkan railway) will also be one of the consultants. Coaches will be manufactured by the Korean company Rotem which will have a tie-up with Bharat Earth Movers Limited. Rotem will also transfer its technology to the public sector which is now assembling coaches for the Delhi Metro.

Parliament question
Meanwhile, the Bangalore Metro figured in Parliament this week as Urban Development Minister Ghulam Nabi Azad told Dr Vijay Mallya in the Rajya Sabha that the UTI Bank has carried out financial appraisal for the project and sent a proposal to the Centre in this regard. As per the appraisal, the total cost of the project will be Rs 5,605 crore (completion cost) and in addition, capital expenditure of Rs 347 crore for rolling stock in the second year of operation and Rs 255 crore to meet the shortfall in revenue for servicing and debt during the first six years of operation has been estimated.

“The appraisal report has been sent by the State government to the banks and FIs interested in funding the project. An exercise regarding the financial pattern, including the respective shares of the Central and State governments, has been initiated,” the minister added in his reply.