The Delhi Metro Rail Corporation (DMRC) has informed the government that it does not recommend the PPP mode of execution, as suggested by the Planning Board, for the Light Metro mooted for Thiruvananthapuram and Kozhikode.
“No private investor will come forward under the PPP unless he gets a return of 15 to 16 per cent. When the Internal Rate of Return (IRR) of the project is only of the order of 2 to 3 per cent, no private party will have interest,” the DMRC has stated in the comments to the points raised by the Planning Board.
The project cost will go up by 20 to 25 per cent if a private party is entrusted with the Light Metro, as per the report.
The cost of borrowing at market rates by the private party and interest during construction will be part of the capital investment.
Interest component
The interest component of the two projects together will be about Rs.900 crore.
The private party will not get the benefit of waiver of taxes and duties and this will increase the project cost by 16 to 18 per cent.
On the funding, the cost of civil works and getting a concessionaire for systems, rolling stock, and operation tried by the Delhi Metro, the DMRC has projected that the investment needed by the State will be Rs.2,650 crore, 49 per cent of the cost.
As the VGF from the Centre will be 20 per cent, the outflow of the State will be 29 per cent plus the land cost.