Released on: October 4, 2008, 3:22 am

Press Release Author: varma

Industry: Real Estate

Press Release Summary: With an investment to the tune of $13.5 billion required for
the future metro projects in the country, the issue of funding model for projects

Press Release Body: With an investment to the tune of $13.5 billion required for the
future metro projects in the country, the issue of funding model for projects needs
a closer look, especially in the context of non-allocation of funds for such
projects by the government and the recent criticism of private-public partnership
(PPP) model used in the Hyderabad metro by DMRC chief E Sreedharan. “The 11th Five
Year Plan does not have any allocation for the metro projects. Projects need to be
taken up on PPP model to fund infrastructure growth in the country,” said Gajendra
Haldia, principal advisor (Infrastructure), Planning Commission.

In this context, the three projects currently underway in the country display
distinct models on which the upcoming metro projects could be funded in Ahmedabad,
Chandigarh and Pune. The Delhi Metro, which has shown extraordinary feats in project
management and efficiency, has been funded solely by the government in cooperation
with Japan Bank for International Corporation. The Rs 12,000 crore Hyderabad metro
has just been awarded to a consortium led by Maytas Infrastructure on PPP basis.
Similar is the case with Mumbai Metro, the first phase of which is being developed
by Mumbai Metro One, a joint venture company between Reliance Infrastructure, Mumbai
Metropolitan Region Development Authority (MMRDA) and France-based Veolia Transport
at an investment of Rs 2,300 crore.

Explaining the model of the Hyderabad metro, N V S Reddy, managing director,
Hyderabad Metro Rail Ltd, said, “The project based on build operate and transfer
basis will be developed by Maytas Infrastructure for a concession period of 30
years. We have got Rs 30,000 crore from the concessionaire in lieu of the 269 acres
of land leased to the concessionaire to develop properties around 33 railway
stations and three depos. The investment in real estate is beyond the project cost
and will be funded solely by the developer.” “In case of the Hyderabad metro
project, the concessionaire will have to pay all the taxes, interest and dividend
unlike the Delhi Metro. The operational losses will also have to be met by the
concessionaire. The Delhi Metro pays an interest of 1.5% on the total loan worth Rs
10,000 crore for a period of thirty years. Also, it is not liable to pay Customs as
well as Excise duty,” said Haldia. The Planning Commission also feels that the model
of Hyderabad metro scores over the Delhi metro in various........

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