Budget to begin funding for Delhi Metro Phase III

The first tranche of central government funding for the third phase of the Delhi Metro commuter rail project is likely to come in the coming 2011-12 Budget.

The Centre is expected to provide around Rs 750 crore (Rs 7.50 billion) as its share of equity infusion. The entire central government equity amounting to Rs 5,000 crore (Rs 50 billion) would be spread over five years.

Delhi Metro Rail Corporation (DMRC) is likely to invest Rs 28,000 crore (Rs 280 billion) for the third phase, of which around 40 per cent, amounting to Rs 10,000 crore (Rs 100 billion), would come as equity support in equal proportion from the Centre and the Delhi government.

"We have graded our equity requirement for phase-III. What we will seek in the 2011-12 Union Budget would be roughly 15 per cent of our total requirement from the Union government, of Rs 5,000 crore (Rs 50 billion)," E Sreedharan, managing director of DMRC, told Business Standard.

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Adding: "While the funding pattern for phase-III is yet to be finalised, we have already advised that the equity contribution from the two governments of Rs 5,000 crore each would be spread over the next five-six years. A provision for that will come in the Union Budget."

DMRC has proposed to add around 70 km through Phase-III to its 189-km operational network in the National Capital Region.

While the metro train operator has already started minor construction work under phase-III to avoid delays, the work would start in full swing only after the funding arrangement is finalised.

Japanese aid again

Sreedharan said of the rest of the fund requirement of Rs 18,000 crore (Rs 180 billion), Rs 10,000 crore (Rs 100 billion) would be sourced as loan from the Japan International Cooperation Agency (Jica).

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This is the Japanese government agency for extending technical and financial assistance for projects in developing nations. Jica loans were instrumental in the commissioning of  phases I and II of the Delhi Metro.

"The loan amount from Jica can be further increased to fill the small funding gap that may remain," Sreedharan said.

DMRC prefers Jica, he added, as the rate of interest of 1.3 per cent at which debt had so far been obtained was "quite comfortable". However, formal talks with Jica on the proposal are yet to begin. These will take place only after the central government approves the project.