Viability factor to delay Nagpur Metro project

Nagpur: A big question mark rises over the viability of the Nagpur metro railway as its financial internal rate of return (FIIR) is just 0.47% against minimum requirement of 8%. FIIR is the money that the operating agency will get from metro railway. The central urban development department (UDD) has told the Nagpur Improvement Trust to ask Delhi Metro Rail Corporation (DMRC) to revise the detailed project report (DPR) and made it clear that the government won’t bridge the revenue gap by extra funds under Jawaharlal Nehru National Urban Renewal Mission.

UDD’s decision makes it difficult to start work on the project in 2014 and complete it by 2019. While the revised DPR may take minimum two to three months, the solution suggested by UDD may make the project more complicated. DMRC had submitted the DPR in February.

The practical rejection of DMRC’s DPR also raises big question mark over competence of government agencies in charge of urban transport. DMRC had prepared the report after a detailed survey. It was supposed to design a viable project.

The central urban development department has sought a revised detailed project report on the Nagpur metro railway project due to doubts over its financial viability. The unfeasibility of the metro model has came to light within a few months. However, in case of Starbus it took years for UDD to intervene. The civic body has been asked to continue with the existing operator and provide it the necessary amenities to make the city bus service viable.

Mass rapid transport system officer on special duty (OSD) SK Lohia during his meeting with NIT officials on Saturday told them that extra revenue would have to be generated to make the project viable.

He later told the media, “Non fare revenue has to be increased by commercial use of space and other avenues. The city has to be designed in a way that people can easily reach their places of work by using the metro railway. Feeder bus services, bicycle sharing and pedestrianization also have to be included in the metro project.” “A metro user should not be required to travel more than 5km from metro rail station by a feeder bus to reach his destination. The distance to be travelled by bicycle should not be more than 0.5km,” Lohia said.

An NIT official said that UDD’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 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 DMRC, he said, “UDD had sanctioned metro rail projects earlier with lower FIIR. Now it has increased the requirement. However, our internal rate of return (IRR) is a healthy 16%.” MP Vilas Muttemwar said that UDD’s estimate of metro rail traffic is not correct. “In the first three months not many people used Delhi metro. Now, everybody is using it. Moreover, a mass rapid transport system should not be considered only from viability angle,” he said.