In the wake of the ongoing debate on private participation for metro rail projects, Principal Adviser of the Delhi Metro Rail Corporation (DMRC) E. Sreedharan has cited a slew of reasons to prove how the PPP mode will sound the death knell for the Thiruvananthapuram and Kozhikode Light Metro project. In a clarification issued here, he said as the managing director of the DMRC, he was the first person to try the hybrid version of PPP (public-private participation) in the country for the metro’s Delhi airport line.
The cost of civil works and of the land was borne by the DMRC, while the cost of supply and installation of different systems, operation and maintenance, were entrusted to a private firm on an open tender basis.
The private partner did not commission the line in time for the Commonwealth Games, for which purpose this line was sanctioned. Commissioning was delayed by six months. After operating the line for about a year-and-a-half, it simply abandoned and walked out of the contract.
Arbitrators
With the help of influential persons, it also managed to get arbitrators appointed and is now fighting a case against the DMRC. Repetition of such formula in Thiruvananthapuram and Kozhikode will not yield results, where revenue prospects are bleak compared to the Delhi Airport line, Mr. Sreedharan opined.
In such hybrid models, the private partner bloats the estimate, boosts the ridership, and avails itself of hefty loans from banks, makes profit, and walks out. It also uses influence to close the contract on its terms, the ‘metroman’ said. As the DMRC was the owner, operation of the Delhi Airport line could be continued without any break.
Lack of resources
The same will not happen with the Kerala Rapid Transit Corporation, since it will not have the experience and resources to suddenly take over the operation and maintenance, in case the private partner walks away.
Mr. Sreedharan cited how the cost of civil work and land cost worked out to about 55 to 60 percentage of the project cost.
“If the government can find resources for the project’s 55 percentage, why can’t the government itself own and operate the project raising funds from the market? There is no doubt that the quickest and cheapest way of realising a metro project is through full government initiative. In the DMRC model, the government’s outflow can be limited to 25 to 30 percentage of the cost,” Mr. Sreedharan said.
