Hyderabad: The Andhra Pradesh government has decided to award the contract to build and operate a Rs8,482 crore urban-commuter rail project in Hyderabad, the biggest in the country, to a single consortium, instead of three as planned earlier.
The winner will be selected by the year-end from among five prequalified suitors. Shortlisted consortia include those partnering Indian companies such as Reliance Energy Ltd, Essar Constructions Ltd, Nagarjuna Construction Co. Ltd, GVK Group, and Navbharat Group.
The project, which will have rail lines running for 67km, will be based on the “build-operate-transfer” model, where the developer will finance, build and operate it for 30 years before transferring it to the government. The five suitors will bid for an 89% stake in Hyderabad Metro Rail Ltd (HMRL), and the financing is expected to close by March 2008.
The decision to award all the three corridors to a single developer was aimed at achieving better inter-station integration and feeder services using the same technology, resulting in better services to passengers, said HMRL chairman N.V.S. Reddy.
Analysts said the Hyderabad Metro project will rank among the largest “public-private partnership” projects ever undertaken in India.
The New Delhi airport, cited by analysts as one of the largest such deals, envisions spending Rs8,600 crore in multiple phases. The first phase of the Mumbai metro rail project, which was awarded to Anil Ambani-led Reliance Energy, was worth Rs2,356 crore.
The Central and state governments have earmarked Rs3,277 crore as grants to assist the viability of the project. It is based on an equity assumption of Rs1,638 crore, of which the state government would hold 11% and the developer 89%. A debt of Rs3,567 crore is projected for the contract. The land would be leased by the state.
Analysts said service revenues rarely contribute to more than operating costs in capital-intensive metro rail projects. “If you see the Hong Kong metro, they are making most of their revenue from real?estate,” said Akhileshwar Sahay, president,infrastructure advisory division for New Delhi-based project management firm, Feedback Ventures.
One suitor agreed, saying ticket revenues in the project alone would not make it viable. “It should be supported by real-estate revenues of at least 25% and around 7% from advertising revenues,” said Amitabh Bhagwat, a senior manager with Siemens Ltd, which is partnering Nagarjuna Constructions.