DMRC seeks “interest-free” Debt to finance Airport Line payment

Delhi Metro Rail Corporation (DMRC) Chief Mr.Mangu Singh has told the Urban Development Ministry that the amount equivalent to termination payment

Delhi Metro Rail Corporation (DMRC) Chief Mangu Singh has told the urban development ministry that the amount equivalent to termination payment (Rs.1820 crore) that the DMRC has to pay to the concessionaire of the airport express line should be given to DMRC as an interest-free subordinate debt to be equally shared by the Centre and government of National Capital Territory of Delhi (GNCTD).

The operations of the 22.7-km express line was handed over to DMRC after the concessionaire Reliance Infra promoted Delhi Airport Express Private (DAMEPL) pulled out of the project on July 1. The banks have already told DMRC to terminate the concession agreement with DAMEPL on account of default. According to the concession agreement, DMRC is liable to pay 80% (Rs.1820 crore) of the outstanding debt (Rs.2274 crore) as termination payment.

To sort out the issue of termination payment Singh has written to the MoUD suggesting sources of the funds to pay the termination amount.

“The subordinate debt will be retired by DMRC in five equal installments after a moratorium of ten years by which time the line is expected to have operating surplus,” Singh wrote.

Singh said that since DMRC will continue to bear the operating losses of the airport line, it will be appropriate that the liability arising on the account of the termination payment is taken care of by GOI and GNCTD

Another option that Singh has suggested is that the DMRC raises the amount equivalent to termination payment as loan from the bank/financial institutions with guarantee from the Centre.

“This will enable the loan to be raised at a minimum cost at about 10% which is the current base rate of commercial banks. Further, DMRC may be given an interest subsidy to be shared between the Central and the state government to the extent of the difference between the current rate of JICA loan (1.4% per annum) and the cost of borrowing from the banks (@10% per annum),” the letter said.

The operation expenses of the airport express line per year is around Rs 90 core whereas the revenues are Rs 30 crore a year.