Metro Rail halts on track again

Metro Rail halts on track again
PIB: Why Not PPP Model? BMRTL: Not In First Phase
The Times of India

Bangalore: When will Bangalore Metro Rail chug closer to reality? With first round of political hurdles and furious debates, it’s cost overruns now.

The Public Investment Board (PIB) has asked the Karnataka government to consider a private-publicpartnership (PPP) model to build the project along the lines of the Bangalore International Airport, coming up at Devanahalli.

Raising concerns that the cost may go up beyond the current levels, additional secretary (expenditure) has suggested a PPP arrangement with major equity stake for the private promoter and minimal support from the central and state governments, sources told The Times of India.

What is affecting the Metro Rail project, represented by the Bangalore Mass Rapid Transit Ltd (BMRTL), is a statement from the revenue department under the finance ministry that the Centre cannot support any exemption of duties and taxes, as a matter of ‘principle’.

A revenue department official said the Delhi Metro Rail Corp project was a special case and similar exemptions cannot be extended to other projects. “Such enduse exemptions are procedurally complex and difficult to administer. Customs duty exemptions on capital goods are also opposed by domestic manufacturers.’’

Without this exemption, the project cost of Rs 6,207 crore for Phase-I will go up by another Rs 510 crore. Similarly, the railway ministry has opposed BMRTL’s proposal for a standard gauge, which means the BMRTL will have to go for broadgauge and shell out another Rs 571 crore.

A Malaysian consortium, Kencana Kassifa Transit Systems (KKTS), has proposed to build the Bangalore Metro Rail on PPP and Build, Own, Operate, Transfer basis and the government needs to invest only 10% of the project cost.
The PIB has also said time and cost overruns in such projects are inevitable. The next round of PIB meeting is yet to take place, but BMRTL has submitted its clarifications.

BMRTL MD K.N. Shrivastava and Karnataka Urban Development principal secretary Shamim Banu have said the PPP option was examined in the past, but it did not take off. But they have told the PIB they are willing to consider the option for future phases of the project.

Shrivastava is confident that the PIB will decide in their favour: “There is no scope now for a PPP in Phase-I. This proposal has followed a particular model and the project will be decided based on that.’’

Cost estimate
The Centre considering various proposals for Metro in Bangalore, Mumbai, Hyderabad, Chennai, Ahmedabad and second phase of Delhi Metro.
Each project requires a minimum of Rs 2,000 cr.
This means the Centre has to shell out over Rs 10,000 cr. States have to make similar contribution.
This does not take into account loans and public bonds to be raised.