World Bank Document - Mumbai Railway Vikas Corporation Ltd ...

accordingly by both administrations. However, this does not make MRVC a permanent structure
and MRVC will remain in existence only as long as it is judged necessary beyond the year 2014,
the end of the current MOU. An amendment to the MOU will be signed to ensure that MRVC
continues as implementing agency of MUTP-2A until its completion.
D. Critical Risks and Possible Controversial Aspects
Risks Risk Mitigation Measures Risk Rating with Mitigation Risk Rating
Operation-specific Risks
Technical Design Demand assessment risk: demand may
exceed the forecast, thereby reducing
the expected passenger comfort
benefits (reduced overcrowding). This
can happen because population or
Additional counts will be made during
project preparation and project
implementation to monitor passenger
loadings. The pace of implementation of
the Strategic Transport Plan may be
economic growth does not change as
forecast. It can also happen because
the fare does not rise at the same pace
as the cost escalation index. Based on
recent traffic counts, this risk is
moderate.
revised accordingly.
Moderate
Implementation
Capacity and
Sustainability
Financial
Management
About ten percent of electric motors
have failed in trains so far delivered
under MUTP-1, with a small impact
on operations as the Vendor has
replaced them, but with moderate
future risk.
Financial sustainability: continuation
of the present fare level trend will
increase the financial deficit of the
suburban operation, creating a
medium-term financial risk for IR.
Possibility of certain gaps in corporate
governance and financial
accountability and management
practices in MRVC. (MRVC is in the
process of implementing MUTP-1 and
is already familiar with Bank
procedures).
The Bank team will encourage IR to pay
more attention to qualification of critical
items of rolling stock procurement.
The impact of the project on IR’s financial
performance as a whole is considered small
and not liable to affect significantly the
sustainability of the suburban operations
and maintenance.
An assessment of corporate governance
and financial accountability (CGFA)
arrangements in MRVC has been
completed. The objective of the assessment
is to (i) benchmark current CGFA practices
in MRVC against industry standards and
good practices and (ii) agree on an action
plan with dates for implementing capacity
building measures that are identified.
Progress on the agreed action plan would
be monitored during project preparation
and prior to implementation.
Funds will flow to MRVC through budget
release, which will be replenished by the
Bank on the basis of quarterly interim
unaudited financial reports and expenditure
forecasts. Direct payment by the Bank to
the suppliers will be the likely option under
the project. The project will comprise only
a few large supply contracts, which will be
subject to prior review by the Bank.
Low
Low
Moderate
(subject to
progress of
implementati
on of agreed
CGFA action
plan
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