The Hindu - Andhra Pradesh 01.08.2009
Metro rail project back on PPP track
| Tight fiscal scenario forces State to opt for it |
A committee headed by Planning Commission member comes out with fresh norms for PPP
Firms of Rs. 3,000 cr. net worth and having executed Rs. 18,000 cr. works can only apply
HYDERABAD: Tight fiscal scenario has forced the government to opt once again for the Public Private Partnership (PPP) mode to take up Hyderabad Metro Rail project.
It might have had to pitch in with as much as Rs. 9,000 crore if the work was to be taken up through a joint initiative with the Centre sourcing loan from the Japanese Bank for International Cooperation (JBIC).
Loan for 50 per cent of the project, estimated to cost Rs. 12,132 crore, could be raised while the rest would have to be financed by the Centre and State.
From the Rs. 1,600-odd crore now, the State’s funding would have to be upped several times for the work which was next to impossible to expect, pointed out official sources.
Moreover, sovereign guarantee by the Centre was mandatory for JBIC funding for which fresh project appraisals becomes necessary, all of which would have taken considerable time.
Instead, it was better to bank on already available Viability Gap Funding (VGF) of Rs. 2,363 crore (20 per cent project cost) offered by the Centre as there was likelihood of an extra 10 per cent coming under JNNURM.
Delhi model
“Delhi Metro funding is a unique model. Chances of it happening elsewhere are remote,” affirm official sources. Despite recessionary trends, formation of stable governments in the Centre and State has renewed investor interest in the capital’s project, it is claimed.
“Many discussions were held at the Government of India (GoI) level on Hyderabad project’s PPP model. It was strongly felt that it was the executing agency which failed and not the model per se. A panel headed by former Cabinet Secretary and present Planning Commission member B.K. Chaturvedi came out with a set of fresh norms to tighten PPP regulations to let only serious players pitch in,” official sources said.
Firms of Rs. 3,000 crore net worth and having executed Rs. 18,000 crore works in the last 10 years can only apply.
Equity
Each member of a consortium shall each hold not less than 26 per cent of the equity, which should also be not less than 5 per cent of the total project cost or Rs.607 crore.
Time-frame
The government is squeezing the bids time-frame to four months because financial and technical bids are not being called separately as the pre-qualification tender itself enables short-listing eligible firms.
Also, the Concessionaire Agreement with Manual of Specifications and Standards remain the same which meant fresh documentation was not needed, official sources added.
