Metro rail cost escalation pegged at ₹2,600cr.

Delays in permissions add to cost-overruns; L&TMRH has taken loan of ₹10,760 crore

May 14, 2019 12:28 am | Updated 07:47 am IST - HYDERABAD

HYDERABAD, TELANGANA, 12/10/2017: L&T Metro Rail engineers and railway design engineers taking up intensive checks of the metro rail trains at Begumpet in Hyderabad. 
Photo: K.V.S. Giri

HYDERABAD, TELANGANA, 12/10/2017: L&T Metro Rail engineers and railway design engineers taking up intensive checks of the metro rail trains at Begumpet in Hyderabad. Photo: K.V.S. Giri

Hyderabad Metro Rail project’s lack of last mile connectivity, commissioning of the two operating routes in stages and suspension of work on the the Old City route between Mahatma Gandhi Bus Station (Imlibun) and Falaknuma has led to the cost escalation of about ₹2,600 crore.

Delays prove costly

From an estimated total project cost of ₹16,571 crore, the cost has zoomed to ₹18,971 crore or by 16% due to various delays in commissioning the entire routes — only Corridor One is functioning in full — and monetisation of the Transit Oriented Development (TOD) or commercial usage at stations has led to the escalation.

L&T Metro Rail Hyderabad has infused ₹2,427 crore and took loans of ₹10,760 crore. Work is currently on to complete Corridor Three – Nagole to HiTec City/Raidurg (28 km) while Corridor Two – Jubilee Bus Station (JBS) to MGBS (9 km) is yet to be made operational.

All these, including non-commencement of the entire stretches, has led to the metro rail getting lesser traffic than envisaged forcing the parent company L&T to shore up to ₹818 crore for the project, said a report by ‘India Ratings & Research’.

Metro rail projects are more capital intensive than other transportation costs and delays are inevitable, the report said and added that although the project has strong economic rationale, the actual usage of metro rail in terms of ridership and growth will become clear only after the entire project is operational.

The continuous ‘suspense’ over the Old City route from MGBS to Falaknuma (6 km) is a major factor considering it passes through thickly populated areas and commissioning of this stretch will reap the envisaged benefits of the inter-modal rapid transit system.

Inflation impact

Moreover, since the project is executed through contracts with global vendors for rolling stock, signalling and communications, etc., halting the activity involves remobilisation of men, machinery and cost escalation due to inflation. Ridership has increased from 55,000 in April last year to 2.55 lakh a day in April yet more patronage is dependent on last mile connectivity and operation of remaining stretches.

Commercial Operations Date or COD indicating the completion of the project has now been extended to July 2019. But, the parent body will have to infuse more funds to complete the remaining stretches even as the government has remained unmoved about the request to bear the additional cost burden considering the delays in providing right of way and other permissions.

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