Cash-strapped Nagpur Municipal Corpn told to share 5% of Nagpur Metro Project cost

NAGPUR: The city’s ambitious metro rail project is facing yet another acid test. The cash-strapped Nagpur Municipal Corporation (NMC) has been asked to contribute Rs450.35 crore in the project. A decision on this will be taken by the general body later this month. Already, the project is facing a huge challenge due to an increase in the estimated financial internal rate of return.

According to the directives of state urban development department (UDD) and a letter received from the Nagpur Improvement Trust (NIT), the NMC town planning department has prepared a proposal and submitted to the office of mayor.

NMC sources told that mayor Anil Sole has discussed the issue with leaders of ruling alliance and given his nod to table the proposal before the general body.

“Sole is likely to convene a meeting of the general body on September 16. The proposal will come up for discussion in the meeting. The BJP-led ruling alliance is expected to give a green signal to the proposal in the house. However, the financial condition of the civic body is a major issue. The NMC’s financial condition has further deteriorated following strong opposition to local body tax (LBT). In fact, it is raising loans for JNNURM and electricity pole shifting projects. Yet, ruling party leaders do not want to be defamed by denying the NMC’s contribution in the ambitious project,” sources said.

According to the town planning department’s proposal, the NMC will have to contribute 5% of metro rail project’s total cost of Rs9,007 crore. “NIT has submitted the detailed project report with the state government. The state planning department sent the report back and raised four queries through a letter dated July 23. The first query was related to the NMC’s consent. Planning department said NIT did not enclose the NMC’s consent letter with the proposal. UDD officials held a meeting with municipal commissioner Shyam Wardhane on July 23 and asked him to submit the consent letter,” the proposal stated.

According to the state planning department’s letter, one of the four queries was related to rate of return. The first was related to the NMC’s consent to contribute 5% of total project cost. The second was related to consent from the Maharashtra Airport Development Company Limited (MADC) since the NIT has mentioned in the proposal that MADC was going to give 100 acres of land free of cost for the project. Instead, the MADC will get a share in the project’s special purpose vehicle Nagpur Mass Transport Company (NMTC). But NIT did not enclose the MADC’s consent letter which it needs to do now. Similarly, the NIT was also asked to submit the letters from other departments linked with the project.

A senior NMC official said giving consent to contribute Rs450.35 crore needs a detailed study. “NMC has to contribute the amount in five years. The project is planned to be executed from 2013-14 fiscal to 2019-20. Every year, NMC will have to give Rs75.05 crore. Funds will have to be raised for which new sources of revenue need to be found,” he said.