The Public, Private Partnership (PPP) model will be adopted

The Comptroller and Auditor General (CAG) has found loopholes in the Delhi airport modernisation project. The Delhi metro-airport link line has gone into arbitration because of structural faults detected on the viaduct and dispute in passenger traffic projections.

The Public, Private Partnership (PPP) working modes have come under intense scrutiny with critics bashing them up. While the jury is still out on issues being faced by these two projects, the government – Central & State both, are sure about the PPPs role in infrastructure development.

The elevated metro rail project for Hyderabad too is being constructed under this model and top officials dealing with it assert this is the right way to go.

Intense deliberations

“The PPP mode was chosen after intense deliberations. There are built-in precautions in the Concessionnaire Agreement (CA) and a single agency – L&T Metro Rail Hyderabad, end to end, is designing, constructing and will later operate & maintain once commissioned till the contract time, 30 years, which can be extended for another 30 years,” explains Hyderabad Metro Rail (HMR) Managing Director N.V.S. Reddy.

Not wanting to get into any issues concerning the two Delhi projects, he affirms, “Our model was very clear from the beginning. The government has openly indicated what it was going to give like 269 acres of land for stations and depots besides facilitating the right of way in widening roads, shifting utilities, etc.,” he says.

‘Joint partnership’

Appointment of Louis Berger, a noted engineering firm, as the Independent Engineer (IE) for the project with the consultancy cost of Rs.83.60 crore to be shared equally by the HMR and L&TMRH, is a significant aspect.

“We do not interfere with the IE and it’s a joint partnership,” attests Mr. Reddy.

The IE will check designs and drawings submitted by the concessionaire, give recommendations, inspect and monitor quality of work at every stage to ensure the system is built as per the prescribed technical specifications, performance criteria and safety standards.

HMR has also another rung of railway experts, retired personnel from high positions to assist in ensuring standards in construction and safety.

The fares have been frozen with the price escalation formula depending on the inflation to be okayed by the government so that “no one can influence” them, he avers.

Effectively it means no surprises such as development fee when the services begin to run will be in store.

The Rs.14,143 crore 72.16 km elevated metro line project being constructed across three traffic corridors has also obtained a viability gap funding of Rs.1,458 from the Centre.

There appears be no doubt about the revenue model either. Losses are expected in the first six or seven years of operations and in a 60 years period, five to six of ‘low’ periods have been factored in.

High earnings

“Real estate earnings will be high because of the transit oriented development as the lines are being built on the dense traffic corridors. Our ridership projection of 15 lakh-25 lakh per day in a 10 year span was not contested. Sure, there are lots of risks involved but it’s a calculated risk and progress is about someone taking the first step,” avers the MD.

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