Will metro rail chug on with pending issues?

Will metro rail chug on with pending issues?

Vijay Times

Bangalore: The Bangalore Mass Rapid Transit Limited (BMRTL) may have to do a lot more homework to convince the Public Investment Board (PIB) to approve the Rs 6,296-crore metro rail project.

Sources privy to the PIB meeting in New Delhi on June 15, told Vijay Times that PIB chairman Adarsh Kishore had sought a clear statement indicating concerns of financial institutions/banks, apart from clarifications on several core issues such as cost estimates, projected ridership, modalities of mitigating cost over-runs, and the more sensitive, but hardly addressed, issue of community consultations.

Sources said Kishore has asked for a clear statement indicating the concerns of financial institutions and banks pertaining to the scope of comfort they (financial institutions) are seeking from the promoters, along with responses from the latter — the Centre and the State.

Sources said UTI Bank Chairman and Managing Director, P J Nayak, was “optimistic” of UTI-led consortium of banks/financial institutions raising "desired resources without any guarantees from GoI or GoK (Centre or the State)".
The “concerns” of financial institutions/banks of the consortium referred by PIB related to the issue of whether granting loans (term loans and bonds) without promissory notes (guarantees) for the project violated Reserve Bank of India norms, sources said.

The promoters are to share an equity of Rs 1,000 crore each. The project costs include the input from infrastructure development cess of Rs 490 crore and debt service reserve of Rs 330 crore.

BMRTL is demanding Central tax waiver to the tune of Rs 510 crore to make the project more financially viable, which the Centre is refusing to oblige, while the State is in no position to fund anything more. The Union Finance Minister, P Chidambaram, too has clearly spelt out that the State must find ways and means to reduce capital costs of the project.
Besides, BMRTL may be compelled to run the project on broad gauge, as against the proposed standard gauge, forcing additional costs of about Rs 600 crore, while it shows a higher projected ridership of 8.2 lakh per day by 2009 — an issue raised by PIB.