Delhi Metro MD smells a scam
In an attack on the private sector’s direct involvement in building metro rail in India, Delhi Metro Rail Corporation (DMRC) managing director E Sreedharan has hinted at a big political scandal in the Hyderabad Metro, and expressed concern at the slow pace of progress in the Mumbai Metro.
Mr Sreedharan has been credited with building a large metro network in Delhi, which started making operating profit from day one. Besides, he also ensured that all projects, being built at a cost of Rs 29,500 cr, would be completed before the deadline.
While Mumbai Metro-I is a joint venture between Anil Ambani-led Reliance Infrastructure and state-owned Mumbai Metropolitan Regional Development Authority (MMRDA), the Rs 12,000-cr Hyderabad Metro project was recently bagged by a consortium led by Maytas Infra.
In a letter to the deputy chairman of Planning Commission Montek Singh Ahluwalia, dated September 11, 2008, DMRC’s managing director cautioned that build-operate-transfer (BOT) mode of building metro rail could backfire.
“The Hyderabad Metro project is being cited as a successful example of BOT approach. Here, I would like to caution that the example of Hyderabad Metro is quite misleading as the negative viability gap funding has resulted solely on account of 296 acres of prime land being made available to the BOT operator for commercial exploitation. This is like selling family silver. Apart from the fact that this might lead to a big political scandal sometime later, it is apparent that the BOT operator has a hidden agenda which appears to be to extend the metro network to a large tract of his private land holdings so as to reap a windfall profit of four to five times the land price,” the letter said.
SundayET has a copy of the letter (No DMRC/89/08) which was also sent to three other officials, including two in the Planning Commission. When contacted, a DMRC spokesperson refused to comment on the issue.
In the letter, the DMRC chief also questioned the private sector’s efficiency in handling metro projects. “World-wide the experience has been that no metro project has succeeded so far on BOT basis. ...Our sole example of Mumbai Metro-I has not given us the required confidence in the BOT route. Even after agreeing to a VGF (viability gap funding) payment of Rs 650 crore plus 26% equity (total government outflow of Rs 780 crore for a project cost of Rs 1936 crore), the project is moving at an extremely slow pace.
Source: ET
Mr Sreedharan has been credited with building a large metro network in Delhi, which started making operating profit from day one. Besides, he also ensured that all projects, being built at a cost of Rs 29,500 cr, would be completed before the deadline.
While Mumbai Metro-I is a joint venture between Anil Ambani-led Reliance Infrastructure and state-owned Mumbai Metropolitan Regional Development Authority (MMRDA), the Rs 12,000-cr Hyderabad Metro project was recently bagged by a consortium led by Maytas Infra.
In a letter to the deputy chairman of Planning Commission Montek Singh Ahluwalia, dated September 11, 2008, DMRC’s managing director cautioned that build-operate-transfer (BOT) mode of building metro rail could backfire.
“The Hyderabad Metro project is being cited as a successful example of BOT approach. Here, I would like to caution that the example of Hyderabad Metro is quite misleading as the negative viability gap funding has resulted solely on account of 296 acres of prime land being made available to the BOT operator for commercial exploitation. This is like selling family silver. Apart from the fact that this might lead to a big political scandal sometime later, it is apparent that the BOT operator has a hidden agenda which appears to be to extend the metro network to a large tract of his private land holdings so as to reap a windfall profit of four to five times the land price,” the letter said.
SundayET has a copy of the letter (No DMRC/89/08) which was also sent to three other officials, including two in the Planning Commission. When contacted, a DMRC spokesperson refused to comment on the issue.
In the letter, the DMRC chief also questioned the private sector’s efficiency in handling metro projects. “World-wide the experience has been that no metro project has succeeded so far on BOT basis. ...Our sole example of Mumbai Metro-I has not given us the required confidence in the BOT route. Even after agreeing to a VGF (viability gap funding) payment of Rs 650 crore plus 26% equity (total government outflow of Rs 780 crore for a project cost of Rs 1936 crore), the project is moving at an extremely slow pace.
Source: ET
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