By making private participation mandatory in metro rail projects, the Central government has essentially ruled out the possibility of providing any financial assistance to the one proposed in Vijayawada unless the State government ropes in private partners.
The new Metro Rail Policy (MRP) that was just brought out by the Ministry of Urban Development made Public-Private Partnership (PPP) component mandatory for Central assistance.
For the Amaravati Metro Rail Corporation Limited (AMRCL), which has been anticipating a relaxation in the norms — 20 lakh population and 20,000 peak passenger per-hour in a direction traffic — that have been a stumbling block so far, the new policy has come as a disappointment.
AMRC payment in vain
AMRCL Managing Director N.P. Ramakrishna Reddy says it is nothing but cheating as the proposal has reached the Public Investment Board (PIB) for approval having been given the in-principle clearance following consultations at the highest level. The AMRCL had paid ₹17 crore (₹15 crore towards mobilisation advance and the remaining amount for preparing a Detailed Project Report) to the Delhi Metro Rail Corporation (DMRC), which was entrusted with the task of implementing both the Vijayawada and Visakhapatnam metro rail projects.
The Vijayawada project has since been stuck in the tendering process while the objections raised by the NITI Aayog on non-fulfilment of the above criteria brought the entire exercise to a grinding halt. The State government then started exploring alternatives and reached the conclusion that a Light Metro Rail (LMR), not the Medium Metro Rail (MMR) as conceived originally, is feasible under the circumstances, but it has not given up the hope that the Central government would consider the Vijayawada metro as a special case having promised to bail out A.P. from the financial crisis precipitated by bifurcation.
Speaking to The Hindu , Mr. Ramakrishna Reddy said KfW, German government–owned development bank, which is one of the two prospective foreign funding agencies (AFD of France is the other) and has helped the AMRCL in zeroing in on the LMR, is being asked to examine the ways to take the project forward.
An additional thing that is to be factored in is Chief Minister N. Chandrababu Naidu’s suggestion to expand the scope of the project to include Gannavaram and Jakkampudi.
As far as funding of the MMR (estimated to cost ₹6,000 crore excluding the land component) under the old policy is concerned, the Central and the State governments were to contribute 20% each as equity and the balance is external funding (loans). Under the new MRP, the Central government’s share will be contingent upon the State’s tie-up with private companies.
The challenge now is to bring in private partners in a situation where no concrete assurance can be given at the moment on financial returns, which entirely depend on the volume of passenger traffic or implement the project without the Central assistance by sorting out a gamut of other issues.
