Hyderabad Metro project is a political scandal, says DMRC MD: report
22 Sep 2008
New Delhi: Delhi Metro Rail Corporation (DMRC) managing director E A Sreedharan has expressed his concerns over the private sector's direct involvement in building the metro rail in India, reports The Economic Times.
According to the report Shreedar has voiced his disappointment over the Rs 12,000-crore Hyderabad Metro project calling it a political scandal.
The Hyderabad Metro project was recently bagged by a consortium led by Maytas Infra, a private construction firm.
In a letter to the deputy chairman of Planning Commission Montek Singh Ahluwalia, the DMRC's MD cautioned that build-operate-transfer (BOT) mode of building metro rail could backfire.
He also expressed concern at the slow pace of progress in the Mumbai Metro, a joint venture between Anil Ambani's Reliance Infrastructure and state-owned Mumbai Metropolitan Regional Development Authority (MMRDA).
In the letter, a copy of which The Economic Times says it has obtained, Sreedharan is supposed to have said that though the Hyderabad Metro project was cited as a successful example of BOT approach, its success was "quite misleading as the negative viability gap funding has resulted solely on account of 296 acres of prime land being made available to the BOT operator for commercial exploitation."
Likening it to selling family silver, Sreedharan's letter is reported to state said that apart from the fact that this might lead to a big political scandal some time later, "it is apparent that the BOT operator has a hidden agenda which appears to be to extend the metro network to a large tract of his private land holdings so as to reap a windfall profit of four to five times the land price.''
Accoding to the report, the DMRC chief also questioned the private sector's efficiency in handling metro projects. ''World-wide the experience has been that no metro project has succeeded so far on BOT basis. ...Our sole example of Mumbai Metro-I has not given us the required confidence in the BOT route. Even after agreeing to a VGF (viability gap funding) payment of Rs650 crore plus 26 per cent equity (total government outflow of Rs 780 crore for a project cost of Rs1936 crore), the project is moving at an extremely slow pace."