The metro rail policy approved by the Union Cabinet that makes Public Private Partnership (PPP) component must for getting Central assistance is a ‘retrograde step,’ Delhi Metro Rail Corporation (DMRC) Principal Advisor E. Sreedharan has said.
“It is highly disastrous. The decision to go for PPP mode and pass on the responsibility of raising funds to the States will hit all metro projects. It will be curtains down for the metro rail aspirations of many cities,” Mr. Sreedharan told The Hindu over the phone on Thursday.
Mr. Sreedhran said while Mass Rapid Transit System (MRTS) projects that had already been sanctioned would go on, but further stages of these projects would be hit.
If there was no government participation securing bilateral loans would become difficult, he said.
Mr. Sreedharan said no State except Maharashtra, which earned 60% of the revenue from metro travel, had the resources to take up such projects. The decision to make private participation mandatory for unbundled components such as operation and maintenance of metro services would only benefit the third party.
“In metro, money comes from operation. How will the borrowed money be repaid? No one is going to purchase the bonds to be floated by the States,” he said, and pointed out that in the case of Chennai metro, the private party roped in by the State government had demanded twice the rate of DMRC as cost for operations.
Mr. Sreedharan, however, welcomed the shift from the present financial internal rate of return (FIRR) of 8% to economic internal rate of return (EIRR) of 14% for approving metro projects. This has been done taking note of substantial social, economic, and environmental gains and reduction of road accidents on account of metro projects.
“The 18-20% EIRR is achievable. Delhi Metro has EIRR of 24%,’’ he said.
