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Mumbai Metropolitan Region Development Authority commissioner R.A. Rajeev
Mumbai Metropolitan Region Development Authority commissioner R.A. Rajeev

‘Equity financing could work for Metro project’

  • The MMRDA commissioner talks about expanding the capacity of public transport in Mumbai
  • The metropoliton is in negotiations with Asian Infrastructure Investment Bank and NDB for lines 5 and 6, and with Japan International Cooperation Agency for lines 10, 11 and 12

MUMBAI : Mumbai’s proposed 337-km Metro rail network will be the largest for any city in the world, and is being developed by the Mumbai Metropolitan Region Development Authority (MMRDA). Metropolitan commissioner R.A. Rajeev, who is in charge of the project, talks about the fund-raising plans and the new ways of financing public infra. Edited excerpts from an interview.

How does the future of Mumbai’s transport look like?

MMRDA’s vision is to reduce traffic congestion in Mumbai. At present, it is at 75% according to several studies. The average speed of a vehicle is 20km/h and, in the city centre, it is about 8km/h. Our plan is to create a Metro network of 337km. Around 200 km is in the execution stage and the rest in planning and bidding stages. By 2026-27, all lines will be built and congestion will reduce to 33%. The average speed of a vehicle will increase to 40km/h.

Mumbai cares for its public transport. But during peak hours, up to 18 people travel per sq. km, while the international average is 6. Every day, 8-10 people die on the tracks of suburban trains. This happens because there was no capacity increase in public transport. With the construction of the Metro, we will almost double the capacity. At present, 8 million people travel every day in Mumbai through suburban trains and BEST buses. When the Metro lines are finished, an additional 12 million people will be able to use public transport.

We are also working on multi-modal integration of all Metro stations for last-mile and first-mile connectivity to and from stations, and we are integrating non-motorized and motorized transport such as e-autos, e-buses, cycles. We are also working on a common mobility provider app so that a person can book all the services for a particular day and buy the QR codes in advance.

The cost estimate for the Metro project is 1.5 trillion. Is financial closure for the different lines difficult to achieve?

We don’t have all the money available to implement these projects. We have some amount in our cash reserves and a land bank valued at 75,000 crore, spread across BKC, Wadala and some outside Mumbai. That cannot be taken to the market immediately because the (sale) value goes down. Last year, we leased land to Sumitomo Corp. of Japan, which brought in about 2,300 crore.

Are you depending on concessional loans from multilateral agencies for the rest?

We have taken loans from Asian Development Bank and New Development Bank (NDB) for Metro lines 7 and 2. Recently we did a financial closure with KfW for lines 4 and 4A. Negotiations are going on with Asian Infrastructure Investment Bank and NDB for lines 5 and 6, and with Japan International Cooperation Agency for lines 10, 11 and 12. In six months, we will financially close all the Metro line projects. Borrowing from domestic banks are not feasible and bonds are a very uncertain market. Equity financing holds promise. I’m waiting for two Metro lines to be completed after which I can monetize a portion of the revenue streams for equity financing. This will give me sufficient upfront value which can be ploughed back to other projects.

Have the talks with CPPIB for equity financing progressed?

It is still on. We would have inaugurated two more Metro lines by December but because of covid, this had to be postponed. It will now be ready by May. I think 60-70% of our revenue streams can be monetized for an upfront amount and as revenue continues to come in, we will buy out this equity portion.

Our capital expenditure on the two lines is 10,000 crore or so; so if we enter an agreement for 20 years, we can expect about 60% of this to come to us upfront.

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