Metro Rail News November 2017

In light of the above, it would appear that the
Policy is a major step up from the metro policy of
2013, which offered the bare minimum in terms of
selection of metro projects, financing pattern,
institutional mechanism, legislative cover and the
approval procedure. The Policy is also beneficial,
as it indicates the mindset of the Government
towards metro rail projects; it wants traction but
sustainable growth. This can be observed from its
emphasis on development of a comprehensive
mobility plan, urging transport service providers to
work together and expecting an analysis of
alternate models for transit mode selection to be
included in the detailed project report. It would
seem that these efforts may put the brakes on
mindless urbanization of cities where a particular
mode of transport, for example a metro rail
project, may not be justified or even necessary.
Private section participation in operation and
maintenance has also been highlighted; this gives
the Government (and the private players) the
opportunity to cherry pick and allocate risks that
each of these parties are best suited to manage.
Having said that, India has had a chequered history
in infrastructure projects. Although the
Government has launched projects and continues
to work with great enthusiasm, many of these
projects end up languishing or distressed.
Attempting to fit an infrastructure project within
the four
corners of a
concession
agreement has
often lead to
parties
knocking on the
door of
renegotiation.
Metro rail
projects has
also seen its fair
share of
disappointment
and learning by
trial and error.
Therefore, it
would be
interesting to
see whether
the policy provides the necessary momentum or just
remains an aggregator of ideas offering solutions for
sustainable growth. There is a void in the metro rail
sector in terms of policy or guidelines on bid
structuring and documentation and project
preparedness (such as land acquisition, right of way,
clearances and approvals, public support and
financial closure). It is important to have clarity on
these issues given the Policy also focuses on
commercial/ property development, value capture
financing, transit oriented development and non-fare
box revenue.
These ideas read together would offer solutions to
improve the image of metro rail projects as capital
guzzlers and attract more private players. However, if
the bids and the projects are not structured
appropriately, the Government may still end up with
bidders who may have the technical expertise but are
not able to achieve financial closure or bidders who
will play the odds and bet on real estate development
around these projects, and then fail to achieve
financial closure. Mumbai metro phase 1 and the first
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