Click to play videoTwo cities have metro rail services, four are in the process of acquiring them and about five are in the queue.
But a battle has broken out over financing model: whether it should be completely government financed as in Delhi and Bangalore or whether the private sector should fund the entire investment from real estate rentals as in Hyderabad.
At the heart of the controversy is E Sreedharan, the Managing Director of Delhi Metro Rail Corporation who has dubbed the Hyderabad Metro a real estate play, a sale of family silver and a political scandal waiting to happen.
The Andhra government has twice threatened to sue him for defamation, but has not moved court and Sreedharan refuses to be silenced.
The Hyderabad Metro model has support from the Planning Commission. It was Gajendra Haldea, principal adviser to the panel’s deputy chairman, Montek Singh Ahluwalia, who drafted the concession agreement and also the procedure to short-list bidders on the basis of their financial and technical qualifications.
Haldea says the government financed the metro in Delhi because it is the nation’s capital; it is unlikely to be as forthcoming with other cities. In any case no provision for government funding for metros in other cities has been made in the eleventh plan, so private investment should be more than welcome.
But there are those like Akhileshwar Sahay, the president of infrastructure consultancy Feedback Ventures, who say that there is no example of a successful privately-financed metro rail project in the world.
He claims to have studied all metros since the London Underground was executed in the 19th Century. He believes it would be a leap of faith for the government to base the financing of such a critical project on fickle real-estate revenues.
Sreedharan agrees. He says that except of specific lines like the Delhi downtown-to- airport link, where high fares can be charged, private-partnership metros are not viable.
They are highly capital intensive and fares have to be kept low to encourage usage. Yet the Delhi Metro (in its detailed project report) had recommended private participation only in the Hyderabad metro because it is an overhead line (lowering cost) where high usage is expected as it passes through the densest parts of the city.
But still a subsidy of 40 per cent was factored in to make the project viable.
But the Maytas Infrastructure consortium that has won the concession has offered to pay the government Rs 35,311 cr over a 35-year period, rather than being paid.
The money will come from rentals of 18 million square feet of commercial space at depots and station. The Hyderabad Metro says no extra land has been made available.
Not so, says Sreedharan. He says the Andhra government has sweetened the project with 269 acres of prime land. Instead of giving the land on lease to the private concessionaire, he says, the land should have been vested in the government-owned Hyderabad Metro Rail Limited.
The state government has also extended the alignment of one of the three lines by five kilometres to terminate at Nagole, allegedly to flatter the value of a large tract of land that, Sreedharan claims, Maytas owns.
The earlier terminus was supposed to be at Osmania University. Hyderabad Metro says the University’s land could not be acquired because of political sensitivity, but Sreedharan says the Andhra government made no honest effort.
He suggests that the Andhra government had decided beforehand who should win the contract, that the bidding was opaque and that he is prepared to face defamation charges.
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