thumb_up 144

COMMENTS

I think MG road to BIA link is okey, provided there is good coverage of metro across Bangalore. Remember, metro passes a stone's throw away from the starting point of proposed express rail link. Even then, I'd prefer a metro link from MG road via hebbal/NH7 which caters to general public too. I don't know the cost difference - if it should cater to general public, then there has to be metro stations at regular intervals, which costs more. Despite the cost, I think we should plan for the future and avoid letting NH7 become another Hosur road.

• thumb_up 29 Likes
• · login or register to post comments

It would be such a waste if the govt goes ahead and completes the exclusive rail link to bial. I have been making this plea that the exclusive rail link be dropped and either a metro/mono non-exlcusive link be setup to bial so that not only the people going to airport but in general people travelling to that area (hebbal, yelhanka.. devanahalli) all can benifit and not only the few air travellers who may not even want to take the train.

I had posted this sometime back.

 

http://clean-and-green.blogspot.com

• thumb_up 37 Likes
• · login or register to post comments

As we have been discussing, we dont need the airport express. Why is the govt turing a blind eye to other options. A good solution world over might not be a good one for India.. we are different  and with specific needs..this is made more than evident with, byfar the biggest PPP in Karnataka, the BIA!

Sreedharan goes on record saying that the initial proposal for a 150 Rs sounded low '.. we think there is scope to increase it to Rs 250. Even then, it wouldn’t be as expensive as taxis '
What are we trying to do here? Fixing train tickets based on what taxi rates are?

Its easily seen that this is an effort to 'sell' ourselves to the Private guys in the PPP..concessionaries did I hear?
Is the govt so incapable to do anything on its own?

• thumb_up 30 Likes
• · login or register to post comments

Vijayan,

You have all the facts right. We have had a few blogs and comments on Praja on this and most will agree with your suggestions. This project I am sure has its genesis in all that noise about connectivity from your friends down south :). We cannot be investing Rs.4000 crores on a link that will serve just 50000-100000 per day.

This will be the biggest white elephant (and before that elephant is born the most chaotic gestation period) ever conceived, if in the present form. (My benchmark for good planning is Singapore and it does not have a dedicated train to the airport. It is an extension of the MRT there).

Let us assume that BIAL does reach a 30 million passenger/year (in and out) in about 8 years time (by which time this fast tracked project might actually get done!). That is about 100,000 passengers/day in and out. 50000 each way. let us say 60% take this train - 30000. Add 1 companion - 60000 one way.

This train is supposed to run every 10 mins (need to confirm). 144 trains each way. That means a train on an average will have about 350 people. So about Rs.70,000 REVENUE/train. In a good year - Rs.600 crores. A net margin of 5% - means Rs.30 crores as profit. Max 45 crores PAT. Not good enough on an investment of Rs.4000 crores. At 10 million each train will have 100 people on an average

In these projects, the elevated tracks take up a lot of the investment. They need to be utilized by rakes that can take 1000 people at a time and not 300.

All this assumes that BIAL will hit the 30 million mark sometime. They need to relook this projected number in the context of $130 crude and its impact on the airline industry.

Srivathsa

 

• thumb_up 32 Likes
• · login or register to post comments

Many NRI intensive forums like Skyscraper City, feel that Mr. E. Sreedharan's plans for the HSRL are the best, and we should proceed without any delay and proper examination of the financial viability.

While I have tremendous regards for Mr. Sreedharan, and his achievements on the Konkan railway, the DMRC is not quite the financial success as many have made it out to be.

I came across this article in today's Business Standard. http://www.business-standard.com/india/storypage.php?autono=336473. Sunil Jain writes his opinions under the column Rational Expectations. It is kind of long, but well worth the read.

Sunil Jain: Give us a break, Mr Sreedharan
RATIONAL EXPECTATIONS
Sunil Jain / New Delhi October 6, 2008, 0:04 IST

In a fairly well-publicised letter to Planning Commission Deputy Chairman Montek Singh Ahluwalia, Delhi Metro Rail Corporation (DMRC) chief E Sreedharan has lambasted the Hyderabad public-private partnership (PPP) model, arguing that his state-owned model is the best one, that the Hyderabad model can “lead to a big political scandal”, that the idea’s to reap a windfall profit from the land allocated, and so on. He points out that while the Maytas consortium has agreed to pay the government Rs 30,300 crore over the project’s life (in terms of net present value, that’s Rs 1,240 crore), much of this is due to the fact that the government gave the metro 296 acres of land it can use for development — had this not been so, Sreedharan says Rs 10,000 crore more would have been required in terms of viability gap funding. Most who read the letter, the contents of which were liberally leaked to the press, would assume none of this applied to the DMRC — indeed, the finance ministry’s so impressed by the argument, it is actively examining the merits of this vis-a-vis the PPP model being pushed by the Planning Commission.

A closer look at the Delhi Metro annual report  makes it clear that most of these arguments are self-serving, apart from of course the fact that the DMRC model, where the Union and Delhi governments own just 50 per cent each of the equity, means that no one’s really in charge of the project — this has its own implications in terms of accountability and vigilance, but that’s the subject of another column. Let’s look at the sops the DMRC’s getting and compare them with the Hyderabad ones that have so shocked the DMRC chief.

In 2006-07, DMRC had a total loan base of Rs 6,648 crore, on which the average interest rate was 1.44 per cent and equity of Rs 3,702 crore, which had earned no dividend so far and looks unlikely to ever earn one. If you assume a market interest rate of even 12 per cent and the same return for equity (though equity returns are usually much higher), this means DMRC is getting an annual subsidy of more than Rs 1,000 crore. Nearly 90 per cent of the loan is a concessional one from the JBIC of Japan, but the exchange rate risk (which is significant in a project of such a long gestation) is borne by the Government of India.

DMRC never paid any excise/customs/sales taxes on capital equipment either — assume this to be a conservative 20 per cent and that’s a one-time saving of another Rs 2,000 crore, or another Rs 240 crore per year subsidy assuming the same 12 per cent interest rate. It also gets electricity at half the commercial rate, a saving of another Rs 25 crore per year. All this, by the way, when DMRC’s annual revenues are just Rs 543 crore, of which Rs 252 crore is from real estate transactions!

Contrast this with the Hyderabad case, where Maytas will raise all funds at commercial rates, has the same tariffs as the DMRC and will still pay the government a net present value of Rs 1,240 crore. So, the savings from the PPP route are obvious.

But if you’ve been following Sreedharan’s arguments, you’ll have noticed the fatal gap in my argument — there’s no mention of the 269 acres of real estate the Hyderabad metro’s got, what Sreedharan calls the selling of family silver. According to the DMRC chief, had this land not been given, Maytas would have asked for Rs 10,000 crore instead of offering to pay the government.

What’s important to keep in mind here is that the Delhi Metro itself got a huge amount of land — the 2006-07 annual report talks of 960 acres of land in just one place! In other words, whatever the Hyderabad metro got, Delhi Metro got many times that. And while the Hyderabad metro didn’t get any land to lease/sell (it can develop/lease only the space above the metro stations/depots), the Delhi Metro’s also transferring the leases of chunks of land for as many as 90 years — this is tantamount to selling government land. While DMRC’s auditors have said that this amounts to selling property and violates the law, the CAG says it is okay — the short point, however, is that DMRC’s land deal is a lot sweeter than Hyderabad could ever imagine. Not surprisingly then that the Municipal Corporation of Delhi has levied a Rs 452 crore property tax on DMRC, which the latter has contested, citing the chief secretary’s decision that this would not be levied — the New Delhi Municipal Corporation has followed with a Rs 33 crore demand. Not paying taxes on the land, in turn, boosts Delhi Metro’s profits even more, and it’s unlikely the Hyderabad one will ever get any tax breaks like this. Interestingly, real estate income in 2006-07 accounted for 53 per cent of DMRC’s total revenues, nearly 70 per cent of EBDIT profits — in terms of pre-tax profits, real estate profits were 11.6 times the overall profits.

What’s most galling is that while the DMRC chief is so fulsome in his praise for his model, he doesn’t care to mention that even as he’s getting these hundreds of crores of annual sops, the metro’s struggling to meet even its physical targets. While the original target for Phase I was to carry 2.18 million passengers by 2005, this was lowered to 1.5 million in 2005 — the 2006-07 report says the ridership was 610,000! So, as the criticism of PPP projects builds up, you’ll do well to keep these facts in mind.

-----------------------

Regards

Devesh R. Agarwal

Visit my aviation blog at http://aviation.deveshagarwal.com

• thumb_up 31 Likes
• · login or register to post comments