Metro rails bleeding, says Planning Commission

Metro rail might as well be a synonym for controversy.
In the latest, the Planning Commission has come out strongly against central funding for upcoming metro rail projects in the country.

Going by the panel, these projects, being executed through 50:50
joint ventures set up by the Centre and the respective State, involve huge outlays and are therefore a drain on the exchequer. But more importantly, there is a lack of accountability and control as the companies so formed do not fall under any ministry or state department.

Metro projects in Bangalore and Chennai are being executed on this model. While the Bangalore project is set for complete launch in December 2011, implementation in Chennai will be over by 2014-15.

The commission has not offered any concrete alternative for metro rail funding.

However, in a throwback to the earlier controversy, it has taken a dig at the Delhi Metro Rail Corporation (DMRC) model.

DMRC chief E Sreedharan had in 2008 written to the Planning Commission deputy chairman Montek Singh Ahluwalia, opposing the public private partnership (PPP) model clubbing land deal for funding Hyderabad metro being implemented by Maytas Infrastructure, a group company of the beleaguered Satyam group.

Even though the PPP experiment by the Andhra government failed, the panel has used the DMRC model to highlight the fiscal burden caused due to the government funding of metro projects.

“Out of the total cost of Rs 10,571 crore, DMRC received Rs 8,857 crore (84%) from the central budget, while the balance Rs 1,714 crore (16%) has been provided by the government of Delhi.

Waiver of customs duties and excise duties on rolling stock and construction equipment were also granted to DMRC. If these tax waivers are added, the contribution of central government would be well above 85% of the total cost,” a Planning Commission document said.

“Bangalore and Chennai are based on a similar structure. While such central assistance may be justified for the national capital, a similar assistance for state metros would constitute unjustified burden on the Centre. This is especially so since a substantial part of the cost can be recouped through commercial exploitation of land,” said the document.

Additionally, the commission has suggested that a committee of secretaries examine the issue and place its recommendations before the Cabinet Committee on Infrastructure.

The commission has long been professing the use of PPP model for metro funding.

In fact, the 11th Plan does not have any allocation for metro projects.

PPP experimentation in metro development is being done in Mumbai. As things stand, Reliance Infrastructure is expected to complete the first phase by the end of this year, one year before the target. Also, it has bagged the Rs 11,000 crore contract to develop the 32 km second phase by 2015.

Lack of accountability is another issue the commission has drawn attention to.

“Projects in Bangalore and Chennai are being implemented through companies with 50:50 equity of the central and state governments. Planning Commission has serious reservations on these arrangements. These companies do not fall under the administrative control of any ministry of the central government or any department of the state government,” said the document.

“They do not follow the regulations of the central government nor the state governments. Moreover, these companies are neither accountable to Parliament nor the respective Legislative Assemblies. These issues have also been raised by the Comptroller and Auditor General in the context of Delhi Metro Rail Corporation,” said the commission.

Interestingly, the secretary to the union ministry of urban transport is a member on the Bangalore Metro Rail Corporation board.