Rs14,600-crore Chennai metro cleared

Chennai metro rail network was approved by the Cabinet Committee for Economic Affairs (CCEA) at a meeting in the capital. The Rs14,600-crore project, vigorously pushed by the ruling DMK, was cleared along with a slew of other infrastructure projects totaling Rs33,400 crore in what is seen as a bid to stimulate the sagging economy.

The Chennai metro project originally drafted in 20006-07 was estimated to cost Rs9000 crore but despite being cleared in possibly the shortest time for a project of its size, has seen its cost escalate to Rs14,600 crore.

The special purpose vehicle formed for the project provides for 15 per cent equity holding by both central and state governments with the state government funding 6 per cent through subordinate debt and the central government funding 5 per cent through subordinate debt.

When the project was first drafted in 2006-07, it was estimated to cost Rs9,000 crore. Despite having received the fastest cabinet clearance among infrastructure projects, its cost estimate has escalated to Rs.14,600 crore.

According to the special purpose vehicle formed for the project, the state and central governments will hold 15-per cent equity each in the project. The former will fund 6 per cent through subordinate debt, and the latter 5 per cent through subordinate debt.

The state government provided Rs50 crore in its 2007-08 budget and an additional 300 crore in the subsequent budget as a measure of its commitment to the project. Only a fraction of the amount has been utlilised for the preliminary work on the SPV, Chennai metro rail corporation (CMRL). The rest has been diverted to CMRL's public funds for use at a later date.

The Japanese government has committed 59 per cent of the funding of the SPV by way of a development assistance loan. This will be arranged through the Japanese International Co-operation Agency (JICA).With the clinching of the agreement for the loan in November 2008, the project completed financial closure within a year of its proposal.

Meanwhile, the first tender for construction work on was floated by CMRL – a 4.8km elevated duct in the Koyambedu-Vadapalani stretch. The bidding process has concluded and tenders are under processing.

However, the land assessment for the project is yet to completed, prior to which work cannot begin. According to a railway official 91.71 hectares of land has to be acquired of which only 9.98 hectares is privately held.

The project envisages a total track length of 45km with 21km being elevated and 24km underground, along two corridors – Anna Salai and Poonamalle high road – connecting Wahermanpet to the airport and the Central railway station to St Thomas Mount respectively. The scheduled date for the completion is 20014-15.