Getting approval for a new metro project is going to be tougher for the States in future. The Ministry of Urban Development has decided to make third party assessment for every new metro project mandatory in the proposed Metro Bill. Besides, the States would have to ensure that all alternate modes of mass transport have been explored under the Comprehensive Mobility Plan of the city before proposing the project.
The Ministry is also considering stipulating appropriate “peak hour, peak direction traffic” for considering metro projects, keeping in view present and future traffic projections in the context of expansion of cities.
Top sources told The Pioneer that the Urban Development Ministry is making several changes and they have almost finalised the “new metro policy”. The Ministry had discussed the new metro policy with the States and the managements of metro projects currently in operation on February 28. The Ministry has also sought comments of other Ministries on the new policy.
Recently, the Ministry returned the proposal for a project in Vijayawada as it was felt that there was no need for a metro there and asked the State Government to explore other modes of mass transportation.
Sources said that though metro projects have a life of above 100 years, the present methods of appraisal take into consideration a project life of only 30 to 40 years for assessing Net Present Value. This sort of appraisal is inadequate to capture the full economic and environmental outcomes of metro projects over a 100-year period.
Keeping this in view, Rajiv Gauba, Secretary, Urban Development Ministry has directed that an appropriate appraisal framework be evolved in a month’s time in consultation with experts in project appraisal.
Also currently, metro projects are being cleared if they have a Financial Internal Rate of Return (FIRR) of 8 per cent. The FIRR is largely based on costs and returns of a project. In place of the FIRR, the Ministry is thinking of introducing Economic Internal Rate of Return (EIRR) of 14 per cent as the benchmark for approving metro projects. The Ministry stated that the EIRR captures long-term economic gains including job creation and environmental protection.
With rising demand for metro projects from different cities, the Ministry’s new policy will lay emphasis on Public Private Partnership to raise finance for the project. According to sources, the new Metro Bill is in the final stage.
The suggestions and comments received from various quarters for drafting the Bill relate to ensuring increased private sector participation, sustainable financing of metro projects, and rigorous appraisal of project proposals to ensure that metro projects are taken up only when absolutely necessary.
Since the new policy seeks to promote private investments under the preferred PPP model, Gauba directed that a clear Dispute Resolution Mechanism be evolved which would address the concerns of private investors.
Also, to ensure innovative and sustainable financing of new projects, the Ministry is also planning resource mobilization through Transit-Oriented Development Policy, value capture financing and municipal bonds.
At present, 326 km of metro rail is in operation in the country, more than 500 km of projects are at various stages of implementation and over 600 km projects are under consideration.
Metro projects in operation include Delhi-NCR (212 km), Bengaluru (33 km), Chennai (20 km), Mumbai Metro line 1 (11.40 km), Mumbai Monorail Phase 1 (9 km), Jaipur (9 km) and Kolkata (27.39 km) and Rapid Metro Gurgaon (5.10 km).
Currently, metro projects under construction are Delhi (115 km), Chennai (25 km), Kochi (26 km), Jaipur (2.50 km), Hyderabad (71 km), Mumbai line 3 (33.50 km), Nagpur (38 km), Rapid Metro Gurgaon (7 km), Ahmedabad (36 km), lucknow (23 km), Mumbai Monorail Phase 2 (11 km), Chennai Monorail Phase 1 (20 km), Kolkata (16.50 km), Pune (31 km) and Extension of Chennai Phase 1 (9.051 km).