Metro rail: Maharashtra to invest Rs 800 cr

The state government's exposure to the Mumbai metro rail project's first phase is likely to be around Rs 800 crore (Rs 8 billion), taking into account the cost of the land that the government is providing for the depot at Versova and the viability gap funding in the offing for the private operator.

PRK Murthy, director of the metro rail project said, "Taking into consideration the cost of the 25 acres for the depot, which is around Rs 350 crore (Rs 3.5 billion), and the viability gap funding that will be built into the final contract, the share of the state government will be close to Rs 800 crore."

The proposed viability gap funding will ensure that the preferred private operator does not lose out on the projected profits.

This, Murthy said, will be calculated for the entire period of the contract but paid during the first five years of the contract.

The total project cost for the first phase is Rs 1500 crore (Rs 15 billion) of which 26 per cent will be in the form of equity and 74 per cent will be debt that will be raised from the market. Of the 26 per cent, one half will be the government's share while the preferred bidder will put in the other half.

Of the government's share, Murthy said Mumbai Metropolitan Region Development Authority would bring in other stake holders in the city such as the BMC and BEST while retaining 50 per cent of the equity for itself.

Bids have been received from five large consortia including Metro One, a consortium led by Reliance Energy, Conex a French private metro operator, BEML and Siemens, Ajit Gulabchand promoted Hindustan Construction Company, which is executing the Bandra-Worli sea link project, IICCU, a consortium led by IL&FS, comprising Ital & Thai, Skanska Cementation, Unity Infrastructure Consolidated Toll Network.

The financial bids for the project will be invited by the end of the month and the selection process is expected to be completed by September.

Metro's Funding Route

The state government's exposure of Rs 800 crore is taking into account the cost of the land that the government is providing for the depot at Versova and the viability gap funding in the offing for the private operator

The depot will be on 25 acres and the cost that will be account for Rs 350 crore of the government's contribution.

The total project cost for the first phase is Rs 1,500 crore of which 26 per cent will be in the form of equity and 74 per cent will be debt that will be raised from the market.

Of the 26 per cent, one half will be the government's share while the preferred bidder will put in the other half.