MoU Signing of Hyderabad Metro Rail Project

Hyderabad|India|September'2010: Government of Andhra Pradesh has signed the Concession Agreement with L&T Hyderabad Metro Rail Pvt.Ltd for development of Hyderabad Metro Rail project in public private partnership (ppp) mode. As required by the bid condition, L&T has formed this special purpose vehicle company for developing the project on design, build, finance, operate & transfer (dbfot) basis.

The Agreement was signed by Urban Development Principal Secretary Mr.T.S.Appa Rao and the Managing Director of the newly formed L&T Hyderabad Metro Rail Pvt.Ltd Mr.V.B.Gadgil in the presence of Chief Minister Dr.K.Rosaiah, Municipal Administration Minister Mr.Anam Rama Narayana Reddy, Ministers from the city Mr.D.Nagender, Mr.Mukesh Goud and Mrs.Sabita Indra Reddy, Chief Secretary Mr.S.V.Prasad and Chairman of L&T Financial Services Mr.Y.M.Deovasthalee.

Presiding over the function, Chief Minister Dr.K.Rosaiah has stated that with 71 km taken up in one go, Hyderabad Metro Rail project is one of the world’s largest metro rail projects and in fact the largest one in ppp mode. Out of the total project cost of `12,132 crore, L&T sought a grant of `1,458 crore (12%) and this entire grant amount will be borne by government of India. Thus, over `12,000 crore will come to the state as investment from private sector and central government. This is the single largest investment in the state, the Chief Minister has said.

Thanking UPA Chairperson Mrs.Sonia Gandhi and Prime Minister Dr.Manmohan Singh for sanctioning such a large project for solving the traffic problems of Hyderabad city, the Chief Minister has mentioned that the Prime Minister and the Planning Commission have appreciated the transparent and successful bid process for the project.

The mammoth size of the project will generate employment for about 5000 engineers and about 45000 skilled and unskilled workers. The project involves consumption of 26 lakh tons of cement; 2 lakh tons of steel; and 58 lakh cubic meters of concrete and this will result in establishment of many ancillary industries around Hyderabad and will give a big fillip to developmental activities in various parts of Telangana region. Appreciating the engineering skills, financial resources and the quality work for which L&T is known, Chief Minster Dr.Rosaiah exhorted the L&T officials to achieve Financial Closure early and complete the project ahead of schedule. He has also advised them to make it a model metro rail system by incorporating the best features of various modern metro rail systems in the world and make Hyderabad the best city for living and for investments.

Hyderabad Metro Rail Ltd Chairman Dr.C.V.S.K.Sarma, Managing Director Mr.N.V.S.Reddy, Advisor Mr.T.Stanley Babu. CM’s Special Secretary Dr.K.S.Jawahar Reddy and other senior officials of government and Larsen & Toubro were present during the Agreement signing ceremony.

Salient features of Concession Agreement

· The project covers 3 high density traffic corridors of Hyderabad viz., i)Miyapur-LB Nagar (28.87 km); ii)JBS-Falaknuma (14.78 km); & iii) Nagole-Shilparamam (27.51 km);

· Development of elevated metro rail system on design, build, operate, finance and transfer (DBFOT) basis in public private partnership (PPP) mode;

· Implementation of the project under AP Municipal Tramways Act, 2008;

· Concession Period is for 35 years (5 years construction period +30 years of operations period), with a provision of extension for another 25 years, provided the Concessionaire discharges it’s obligations without any material breach or default;

· Estimated Project cost is `12,132 crore. Any increase in cost shall also be borne by the Concessionaire;

· Estimated traffic demand is 15 lakh passengers per day in 2014 and 22 lakh passengers per day in 2024;

· Concessionaire can undertake Real Estate Development upto a maximum of 18.5 million sft subject to the municipal bye laws, through utilization of air space over the 269 acres of land earmarked for Rail facilities at their own cost. However, ownership of land and assets remains with Government and Concessionaire cannot sell the developed assets;

· Concessionaire can rent out the air space after commencement of operations of the Rail system and shall handover all the assets and the Rail system to Government at the end of the Concession Period;

· The Concessionaire shall provide the Government “Golden Share”, which requires an affirmative vote of the Government Director for passing any resolution on any of the “reserve matters”;

· Cost of shifting the utilities shall be borne by Government;

· Concessionaire is responsible for safety of operations and shall obtain permission from the Commissioner of Railway Safety for opening the System for traffic;

· Key performance indicators include provision of enough air conditioned coaches and a number of other provisions to make the Rail System a state of the art world class Mass Rapid Transit System;

· System shall be designed for two minutes frequency but trains can initially be run with three to five minutes frequency;

· Fail-safe signaling system with latest features;

· Automatic Fare Collection system with smart cards and other devices;

· Intermodal integration with rail terminals, bus depots, MMTS stations and feeder buses;

· Fare structure consists of a minimum basic fare of `8/- and a maximum fare of `19/- in 2014;

· Concessionaire shall pay to the Government from 21st year onwards 0.5% of the Realizable Fare net of taxes and increasing it additionally 0.5% every year, subject to a ceiling of 10%.

Way Forward: L&T has to submit bank guarantee for `360 crore as Performance Security to government and achieve Financial Closure for the project within 6 months. It has to complete geophysical and traffic surveys, freeze metro rail viaduct alignment and various facilities of the stations and depots and submit thousands of detailed designs and drawings for approval of Hyderabad Metro Rail authorities, Indian Railways, National Highways and other connected government agencies.

L&T has started shifting its key engineering experts from different parts of the country to Hyderabad. It has appointed it’s construction veteran Mr.V.B.Gadgil as the Managing Director of the new special purpose vehicle company to execute the Hyderabad Metro Rail project on fast track. Simultaneously, Hyderabad Metro Rail Ltd is also vigorously pursuing with various government agencies and private individuals for acquisition of land and properties, widening of roads and identification of utilities for starting the ground works in January 2011.