New Metro Rail Policy
1.The central government will approve and aid metro rail projects only if they have private participation and ensure last-mile connectivity for users, uder a new policy cleared by the Union cabinet on Wednesday.
2.The states will get powers to make rules and regulations and set up permanent fare fixation authorities. In line with global best practices, metro projects will be approved on the basis of ‘Economic Internal Rate of Return of 14%’, a change from the existing ‘Financial Internal Rate of Return of 8%’.
3.Private participation either for complete provision of metro rail or for some unbundled components (like automatic fare collection, operation and maintenance of services, etc) will form an essential requirement for all metro rail projects seeking central financial assistance,
Three options for states wishing to take up metro projects and are keen on central assistance.
One, public-private partnership with central assistance under the finance ministry’s viability gap funding scheme;
two, central government grant under which 10% of the project cost will be given as central aid in a lump sum; and
three, 50:50 equity sharing model between central and state governments.
Private participation will be mandatory under all three options.
1.A positive aspect of the policy is its focus on last mile connectivity through feeder services for a catchment area of 5km.
2.The move comes at a time of rising demand for metro rail networks and various state governments making project proposals.
- The Metro man Sreedharan has opposed the private partnership in Metro projects.
- In India the experience of private partnernship metro projects at Delhi ,Mumbai and Hyderabad has been very bad.
- At present, metro projects with a total length of more than 350 km are operational in eight cities — Delhi, Bengaluru, Kolkata, Chennai, Kochi, Mumbai, Jaipur and Gurugram , all are gvt run and doing goods/
- These are Capital intensive project and do not yield return more than 3% per annum but the private players do not invest in any project where returns are less than 15% per annum.
7.. It is rarely possible for an urban transport project to be profitable. Yet for high-density populated cities infrastructure projects need to be constructed, says The returns from these projects have to be assessed taking into account environmental costs, equity costs and so on