The state government has already initiated steps to set up a SPV company for the A’bad-Gandhinagar metro rail. Several crucial meetings have been held.
The futuristic Ahmedabad-Gandhinagar metro rail may find it difficult to get investors from the private sector as its estimated cost has escalated to more than double its estimated cost in 2005.
A government study conducted after the project was recently revived for implementation has put the estimated cost of the project at Rs10,000 crore, while the estimated cost in 2005, when the first detailed project report (DPR) was submitted, was just Rs4,500 crore.
The revised cost of the project is causing concern as the state government wants to build the metro rail in public-private partnership (PPP). Experts believe that the high estimated cost will discourage private players from investing in the project as the corporate sector is already battling a severe global recession.
Sources in the state government said that the revised project study, including its estimated cost, is likely to be submitted to the state government in March 2009 by the Delhi Metro Rail Corporation Ltd (DMRC).
The sources further said that the state government had written to the Central ministry of urban development a few days back seeking assistance to the tune of 50% of the ‘viability gap fund’ (VGF). The state government has sought help on the same lines as the assistance given to the Hyderabad metro rail project.
The Centre has not made any commitments yet but it is said to have responded positively. “We are hopeful that the Centre will provide financial help for the project,’’ an official said.
Sources said that the estimated cost of the Ahmedabad-Gandhinagar metro rail has increased to Rs10,000 crore mainly because of inflation. The other major reason is the inclusion of new routes which will cover other ambitious projects such as Gujarat International Finance-Tech City (GIFT), Delhi-Mumbai Industrial Corridor (DMIC) and Dedicated Freight Corridor (DFC), among others.
“The state government has already initiated steps to set up a special purpose vehicle (SPV) company for the Ahmedabad-Gandhinagar metro rail. Several crucial meetings have also been held,” a source in the government said. “Formalities for setting up of the SPV are likely to be completed soon.”
Sources said that the government is so keen on private participation that it plans to organise a separate investors’ meet for the project in March or April this year.
“The government wants to organise a separate investors’ meet for the metro rail, which is why it did not include the project for marketing at the recent Vibrant Gujarat Global Investors’ Summit,” a source said. “We are also planning a special marketing drive with an eye on foreign
investors.’’
The government wants to implement the project in public-private partnership (PPP) on the lines of the Mumbai metro rail, instead of the Delhi metro. The Mumbai metro is being built on ‘build-own-operate and transfer’ principle by a consortium which includes major companies such as Reliance Energy (REL), the European rail company Connex, the Mumbai metropolitan regional development authority and the Hong-Kong based company, MRT.
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