Bangalore: Bangalore Metro Rail Corp. Ltd (BMRCL) expects the commercial development of some 50 acres of land will help defray the cost of building the network—to the extent that the Asian Development Bank (ADB) last week approved a $250 million (around Rs1,250 crore) loan without a government guarantee for the first time in India.
It is also increasing the amount of construction that will be permitted along the Metro network and considering a cess on new developments along the proposed second phase. Bangalore Metro is seeking to raise as much as Rs500 crore from these measures over the next five years, said U.A. Vasanth Rao, general manager of finance at BMRCL.
Of the 50 acres identified through a property survey, a 1.98-acre parcel of land along S.V. Road and about 10.5 acres near Byappanahalli have already been opened for bidding and the process will be complete by May-end at the latest, Rao said, without elaborating.
An official aware of developments said nine companies had attended pre-bid conferences.
The Karnataka Town and Country Planning Act is being amended so that areas along almost the entire Metro corridor will be eligible for FSI, or floor space index, of 4, which is more than in some of the other areas in the city.
FSI, or the more commonly used FAR, or floor area ratio, refers to the amount of construction permissible on a given plot of land. An FSI of 4 would indicate that if the plot measures 1,000 sq. ft, the user can build as much as 4,000 sq. ft. Rao said the Metro will demand a slice of the benefit that accrues to developers from the increased FSI.
The money will be shared among water, sewage and other utilities with the Metro’s share of just over 60% planned to be channelled into a Metro infrastructure fund, he added.
The Metro expects to raise over Rs500 crore in the next five years through both the increased FSI and new development cess, Rao said. The first phase of the Metro spanning 7km will cost Rs11,609 crore, with the second phase, which hasn’t yet been approved, is expected to cost as much as Rs.26,000 crore.
Anouj Mehta, nodal officer for public-private partnership projects at ADB, said the non-sovereign guarantee loan was made after the multilateral funding agency looked at the project’s repayment ability.
“This is especially critical we feel as this adds credibility to both this project (and) also to the bankable financial model which is able to attract commercial finance without recourse to sovereign guarantees,” he said in an email. “Given the size and scale of India’s urban transport requirements, the key will be the development of such bankable models and while of course government financing will remain central to financing, it cannot alone meet all urban transport investment requirements.”