No PPP mode for light metros; PPP model has failed in several metro projects including the phase 2 of Delhi Metro: Chief Minister Oommen Chandy.
Thiruvananthapuram (TVC): A High Level meeting held today at Thiruvananthapuram has rejected the proposal of the state Finance Department to have private sector participation in the proposed light metro projects in Thiruvananthapuram and Kozhikode. The government rejected the report of Finance Secretary K M Abraham based on Sreedharan’s assurance that JICA funding could be utilized for the project. As per the plan, state and central government must contribute only 40% funding for the project.
The state cabinet will soon take a final decision on this according to the recommendations of the meeting, chaired by the chief minister. Chief minister Oommen Chandy said that Delhi Metro Rail Corporation [DMRC] will implement the projects. Private sector participation will not be there. Funding will be provided through financial support by the centre and the state governments and through loan from agencies like Japan Internationla Co-operation Agency [JICA].
Sticking to his earlier stand on the light metros, DMRC principal adviser E.Sreedharan today said that the public-private partnership (PPP) model is not suitable for the project. PPP model has failed in several metro projects including the phase 2 of Delhi Metro.
“Everyone knows my stand on the project. There is no need to repeat it,” he told reporters.
He also informed the chief minister that 20 per cent of the cost would be met by the central government and JICA will extend the remaining part as loan at 0.5 per cent interest.
The debate over PPP mode intensified as the state finance department had recommended that only hybrid PPP model would be effective for implementing light metro. The finance minister K.M. Mani had endorsed this and this made a rift between Sreedharan and Kerala government.
Both finance minister and the department have the view that cost on signaling, operations etc should be incurred by the private sector company and the state government will provide the basic facilities for the projects. According to the finance department the private partner should invest roughly Rs 2600 crore for the project. The finance department had suggested hybrid-PPP mode considering the financial situation of the state. Major concerns raised by finance department such as flaws in the DPR and violation of CVC norms by awarding project on nomination basis were ignored by the government.
A section of the media even alleged that the move is to include an Italian company in the light metro projects. Earlier, in two rounds of meeting with the chief minister, Sreedharan had stuck to his stand. This made the government on an embarrassing mode as allegations were raised against some ministers.
The chief minister rejected the proposal by the finance department as the government is on a tight spot as various allegations were leveled against some minister, including the finance minister.
The CM said that a decision on awarding the project on nomination basis to DMRC and approving the detailed project report (DPR) will be taken after discussing them in the cabinet next week. The DPR submitted by DMRC in October last year is yet to be approved by the cabinet. Sreedharan has urged the government to immediately approve the DPR so that they can apply for JICA funding.
Implementation of the project without making corrections in the DPR would be detrimental for the state, experts warn.
This put the long-drawn controversy and heated public discussions over the choice of implementation model for which the state bureaucracy had insisted upon the PPP mode, to and end. In doing so, it had cited the apparent inability of the state to take up implementation of such a large project at a time when its finances are in poor shape. Speaking to newspersons after a meeting with Sreedharan a short while ago, Chief Minister Shri Oommen Chandy said that the state and central governments would equally contribute 40 per cent of the project costs.
The rest of the funds (less land costs and taxation) will be raised through a JICA (Japan International Cooperation Agency) loan bearing 0.5 per cent interest. In this manner, the burden on the state will be comparatively less, the Chief Minister said citing Sreedharan’s assurance in this connection.
The decision will now be referred to the state cabinet for approval. It comes on a day when the Chandy government has completed four years in office and is stepping into the fifth and last. In Kochi, work on a full-fledged metro is currently on and is expected to be completed by June next. Monorail was the preferred first choice for Thiruvananthapuram and Kozhikode.
But the state government did not get a favourable response to the monorail tender. It is then that it opted for ‘light metro.’ There is no significant difference between the metro and light metro except possibly in the size and extent of the command area served. A metro serves a large metropolitan city while the light metro is used for smaller cities and deploys lightweight rail cars or even trams in the local networks.