Prime Minister Manmohan Singh on Wednesday led the foundation of Rs 19,500-crore (Rs 195 billion) Metro Rail Project, which authorities hope will help ease traffic flow within the metropolis.

The ceremony, held at Vikhroli in Northeast Mumbai, signals the start of Phase I of the Mass rapid Transit System. The launching of the project is seen as a step towards making Mumbai a world class financial hub.

Singh was accompanied by Maharashtra Governor S M Krishna, Chief Minister Vilasrao Deshmukh, Reliance Anil Dhirubhai Ambani Group Chairman Anil Ambani and Mumbai Metropolitan Commissioner T Chandrashekhar at the ceremony.

Union ministers Sharad Pawar, Jaipal Reddy and Murli Deora and Ambani's mother Kokilaben, were also present.

The consortium led by Reliance Energy Ltd, a RADAG venture, and Mumbai Metropolitan Region Development Authority had bagged the contract for the Phase I at a cost of Rs 2,356 crore (Rs 23.56 billion).

It may be recalled that Reliance Energy had to downscale viability gap funding from Rs 1251 crore (Rs 12.51 billion) to Rs 650 crore (Rs 6.5 billion) after hectic negotiations with MMRDA authorities.

The Rs 650-crore VGF would be funded through Union and state government resources.

The first corridor in Phase I, the 11.7 km Versova-Andheri-Ghatkopar stretch, one of Mumbai's most congested stretches, is expected to service close to 60,000 commuters per hour on its completion by 2009.

French company Connex, which has undertaken several similar mass rapid transports systems worldwide, including in in Melbourne, Boston and in Germany, is the operational partner of the consortium. 

The phase one of the metro project also includes the 38 km Colaba-Mahim-Charkop corridor and 14 km Bandra-Kurla-Mankhurd corridor. The 63 km-long three line would be built at an estimated cost of Rs 12,777 crores (Rs 127.77 billion) and expected to be completed by 2010-2011.

With the foundation stone laid on Wednesday, the consortium would embark on a process to formulate a special purpose vehicle for the execution of the project with MMRDA.

The metropolitan authority would hold 26 per cent equity in the SPV for which a provision of Rs 134 crore (Rs 1.34 billion) has been made. The project is on build-own-operate and transfer basis for 35 years, of which five years are for construction.

In the next three months, the consortium would complete the tendering process for vendors, financial closure of SPV and area-marking to start on-site construction scheduled for early October.

The entire Versova-Andheri-Ghatkopar route would be on 'Standard Gauge' elevated rails with 12 elevated stations. It will reduce the commuting time on the stretch to 21 minutes, from the present 70 minutes.

The stations would have automatic ticketing facilities with less or no human interface, cafetaria, public utilities and elevators apart from all facilities to enable easy travel for the physically-challenged.

The Mumbai Metro Rail would be 146.5 km long and is estimated to cost Rs 19,500 crore (Rs 195 billion). There are nine lines, of which 32.5 km would be underground and 114 km on elevated rails. The first phase is expected to be fully functional by 2011, the second by 2016 and the final phase by 2021.

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