All You Need To Know About The New Metro Rail Policy
On August 16, the Union Cabinet approved a new Metro Rail policy that seeks to cover more and more cities under the network.
Here are the key highlights of the policy:
Going private
With an aim to increase private participation across Metro operations, the policy has made PPP (public private partnership) component mandatory for availing of Central assistance for new projects. “Private participation either for complete provision of Metro rail or for some unbundled components (like Automatic Fare Collection, Operation & Maintenance of services, etc.) will form an essential requirement for all Metro rail projects, seeking Central financial assistance,” says the policy. This will help capitalise on private resources, expertise and entrepreneurship.
States can take up Metro projects exercising any of the three options for availing Central assistance:
Under all these options, private participation is mandatory.
There are different ways in which private partners can help run the operations. These include:
Cost-plus fee contract: Private operators could be paid a monthly/annual payment for operation and management of the system. This can have a fixed and variable component, depending on the quality of service. Operational and revenue risk is borne by the owner.
Gross cost contract: Private operators are paid a fixed sum for the duration of the contract. In this case, the operator will bear the O&M risk while owners would bear the revenue risk.
Net cost contract: In this case, the operator will collect the complete revenue generated for the services provided. If revenue generation is below the O&M cost, the owner may agree to compensate.
Keeping it connected
With an aim to improve the last-mile connectivity, which is inadequate at present, the new policy talks about the development of catchment area of five kilometres. On either side of Metro stations, states will have to provide necessary last-mile connectivity through feeder services, non-motorised transport infrastructure or para-transport facilities. In their proposal for Metro projects, states will have to specify the investment they would be making in this regards. The policy also mandates alternate analysis, requiring the evaluation of other modes of mass transit in terms of demand, capacity, cost and ease of implementation.
An Urban Metropolitan Transport Authority (UMTA) will have to be set to prepare comprehensive mobility plans for cities for ensuring complete multi-modal integration for optimal utilisation of capacities.
A fresh pair of eyes
According to the new policy, new projects will undergo “rigorous assessment” by an independent third party before they receive an approval. The policy also stipulates a shift from the present financial internal rate of return of eight to an economic internal rate of return of 14 per cent for approving Metro projects.
Keeping it compact
The policy mandates transit-oriented development (TOD) to promote compact and dense urban development along Metro corridors. Now, states need to adopt innovative mechanisms such as value capture financing tools to mobilise resources for financing Metro projects by capturing a share of an increase in the asset values through betterment levy. States would also be required to enable low-cost debt capital through the issuance of corporate bonds for Metro projects.
Money management
As financial viability is a key parameter to approve new projects, the policy says states will have to clearly indicate in the project report the measures to be taken for commercial/property development at stations. Real estate nearby should also be utilised to generate greater non-fare revenue generation through advertisements, lease of space, etc.
Also, states will set up permanent fare fixation authority for timely revision of fares.
The current status
At present, Metro projects with a total length of 370 kms are operational in eight cities of Delhi (217 kms) , Bengaluru (42.30 kms) , Kolkata (27.39 kms) , Chennai (27.36 kms) , Kochi (13.30 kms) , Mumbai (Metro Line 1-11.40 km, Mono Rail Phase 1-9.0 km) , Jaipur (9.00 kms) and Gurgaon (Rapid Metro-1.60 km) .
Metro projects with a total length of 537 kms are in progress in 13 cities, including the eight mentioned above. New cities acquiring Metro services are Hyderabad (71 kms) , Nagpur (38 kms) , Ahmedabad (36 kms) , Pune (31.25 kms) and Lucknow (23 kms) .
Metro projects with a total length of 595 kms in 13 cities, including the 10 new cities, are at various stages of planning and appraisal. These are in Delhi (Phase-IV, 103.93 km) , Delhi-NCR (21.10 km) , Vijayawada (26.03 km) , Visakhapatnam (42.55 km) , Bhopal (27.87 km) , Indore (31.55 km) , Kochi (Phase II-11.20 km) , Greater Chandigarh (37.56 km) , Patna (27.88 km) , Guwahati (61 km) , Varanasi (29.24 km) , Thiruvananthapuram & Kozhikode (Light Rail Transport-35.12 km) and Chennai (Phase II-107.50 km) .