Expanding Metro Footprint-II: When rapid transport is the only way out

The first large PPP Metro project of Hyderabad has faced cost overruns, compelling the concessionaire, Larsen & Toubro, to ask for compensation
You might wonder why Kochi Metro should be acquiring 78 boats this year.

No, it is not expecting waterlogging in the stations. Instead, it is planning to provide commuters last-mile connectivity to their homes in islands around the city. By doing so, officials of the company expect ridership to go up 5-10 per cent. And, it will reverse the declining trend in the number of people taking public transport in a city whose population is 2.5 million.

In Hyderabad, where the Metro is being built on public private-partnership (PPP), the travel time on the operational 29-km Miyapur-to-Nagol section has been reduced by an hour to just 45 minutes (by bus it took one hour 45 minutes). And the good news is that there is no longer a traffic nightmare like it was a few years ago.

With most Indian cities facing congestion and commuters spending more time to travel to office, state governments are putting in money to set up Metro networks.

The problem is serious and growing. According to global crowdsourcing site Numbeo, in the Asian region, nine Indian cities are on the list of the 30 most congested in terms of time taken by commuters, while seven of them are in on the global list of the top 30. Kolkata tops the charts with commuters spending, on average, 71 minutes every day to commute one way, Mumbaikars spend 63 minutes, while Bangalorians take 52 minutes, just to name a few. Worse, in terms of carbon dioxide consumption, based on the time of commuting, eight of the 30 worst cities are in India, such as Delhi, Kolkata, Mumbai, and Gurugram. 

Cities, even if it is a bit too late, are gearing up to combat congestion by trying to push the share of public transportation.

Mumbai, for instance, has been way behind in the development of a Metro network, thanks to a couple of false starts with the public-private partnership model, and political wrangling. Mumbai has now put together a massive action plan to get back in the game. It has got up a master plan of over Rs 830 billion to build over 190 km of Metro network (currently it is as low as 20 km), which, when completed, will carry more than 5.8 million passengers every day. And this time it will be funded by the government and multilateral agencies. Work is now on to construct over 68 km of Metro network, which includes the crucial 33.5-km stretch between Bandra-Colaba and the Santacruz Electronics Export Processing Zone, expected to be completed by December 2021. This crucial artery could make a huge difference to congestion — it will carry 1.7 million passengers every day, reducing the burden on the choked suburban railways by 15 per cent. It will also cut the number of vehicles plying on the same route by 35 per cent (about 450,000 vehicles), which will save more than Rs 5.50 billion of fuel yearly, according to estimates by Mumbai Metro.

A key worry has been the slow speed of implementation. In Chennai, for instance, the Metro was conceived in 2009 with an investment tag of Rs 146 billion. But inordinate delays and lack of political will saw the price go up to over Rs 200 billion. So, citizens in Chennai currently have only 29 km of metro network, which carries just 24,000 commuters daily. But the good news is that once the first phase of the project, of 40 km, is completed, Metro executives say it will reduce the time of travel by 75 per cent in parts of the city. Maybe then only the share of public transportation in the city, which is as low as 31 per cent and going down every year, will reverse.

Challenges are different in Hyderabad. The first large PPP Metro project has faced cost overruns, compelling the concessionaire, Larsen & Toubro, to ask for compensation. That is because the project shifted to Telangana, which spent over Rs 30 billion in providing land and shifting the utilities.

But the project is structured differently from other Metros, which are primarily funded and run by the government and depend mainly on revenues from fares. But the concessionaire expects to earn as much as 45 per cent of its revenues from lease rentals (they can monetise 18.5 million square feet, of which 300,000 square feet has been built). But it also has to spend over Rs 22 billion to develop the real estate infrastructure.

Whether this PPP model works will decide the future of many others. The operational viability of the project is dependent on whether it can generate around Rs 10 billion. And Metro experts say that it does not seem — after the cost overruns — it will be able to make money only after 11 years even if it reaches its peak traffic of 2.5 million a day in 10 years. That might not be a business plan which would attract a lot of investors.

Yet some Metro companies are trying PPP routes in a limited area. In Kochi, for instance, the automated ticketing system is run by Axis Bank, which won the contract through a bid, will run the system for 10 years, and put in all the capital. Apart from paying royalty  over Rs 2 billion for the period, Axis Bank also pays 20 per cent of the revenue, which is generated from utilising the Kochi-1 card (pre-paid debt card) outside the metro in merchant outlets.

Yet despite all the problems and the large investments, a lot of non-Metros see rapid transport as the best alternative for their citizens. Just four months ago, Lucknow, which has a population of five million, rolled out Metro in a limited stretch of 8.5 km (at a cost of Rs 20 billion), which connects the airport to the central station. And work is in progress for another north-south corridor of around 14.5 km, which will be completed by April 2019. A Metro official points out that once this project is completed, it will reduce congestion on the busiest part of the city. Currently, it is carrying only 25 per cent of its capacity but once the bridge across the Gomati river is done, the numbers will go up dramatically, says the official.

In Kolkata, where the first Metro was built, the pace of growth slowed. But, it is now implementing an innovative Metro line, the first in the country where part of 16.9-km line will be underwater, connecting Howrah and Kolkata. Once this Metro is constructed, Kolkata will have a network to carry over 1.3 million passengers.

With reporting by T E Narasimhan, Amritha Pillay, Dasarath Reddy Bhuswam, Virendra Singh Rawat, Avishek Rakshit and Megha Manchanda

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