MUD returns Nagpur Metro Rail DPR to DMRC, suggest’s modifications on Viability grounds

NAGPUR: The Nagpur metro rail project is not going to take off in near future as Central government has found the very model unviable. A senior official of Jawaharlal Nehru National Urban Renewal Mission (JNNURM) had impressed this fact upon Nagpur Improvement Trust (NIT) last month.

On Wednesday, a high level meeting of officials of Ministry of Urban Development, Delhi Metro Rail Corporation (DMRC) and NIT was convened in which the ministry officials asked DMRC to make major changes in the project. Its basic suggestion is that the city has to grow along the metro corridors so that more and more people use this mode of transport. For this places of work must be located along the corridor and feeder bus services must be available from the metro stations to adjoining areas. The viability also has to be increased by increasing the non-fare revenue by making commercial use of space acquired for the project.

The problem is that Nagpur metro rail’s financial internal rate of return (FIRR) is just 0.47% against minimum requirement of 8%. FIRR is the money that the operating agency will get from metro railway. Centre had earlier sanctioned metro rail projects with less than 8% FIRR but it found out that the implementing agencies sought viability gap funding after some time.

The ministry officials once again made it clear that the government won’t bridge the revenue gap by extra funds. This decision makes it difficult to start work on the project in 2014 and complete it by 2019.

NIT officials said that DMRC will now have to collect extra data to make changes in the DPR. “We will convene two to three meetings to discuss the changes. A team of DMRC may come to Nagpur for this purpose,” he said.

The official, however, contended that MoUD’s requirement did not pose a major hurdle. “We already have a transit oriented development (TOD) plan. We will increase the floor to space index (FSI) within a distance of 0.5km on both sides of metro corridor to concentrate development along it. Revenue from government land will also be included in the project,” he said.

On why DMRC’s DPR does not meet the requirements of Central government, he said, “Our internal rate of return (IRR) is a healthy 16%.”

Nagpur is not the only city whose metro rail model has been rejected by MoUD. In Wednesday’s meeting, the ministry officials asked DMRC to make changes in DPRs of Pune and some other cities. In each case the MoUD does not find the project viable.