Bengaluru Metro: A slow train to progress!
Namma Metro is still dependent on the state government even for its operational cost.
It has been over 10 years since Metro phase 1 work started and the cost overrun is already Rs 2,000 crore. While the Delhi Metro has been able to fund its next phase, Namma Metro is still dependent on the state government even for its operational cost, which is not surprising considering the number of passengers who are using the Metro which currently runs only on short stretches.
The construction of the metro (phase 1) has still not been completed even after eleven years, and the expenditure of a whopping Rs 2,000 crores, with no clarity on the total estimate after completion of the project.
While the Delhi Metro with its operational surplus, can fund all its construction phases, the Namma Metro is still dependent on the state government, even for its operational costs. This is not surprising, considering the patronage in the small stretches that are commercial.
As a matter of fact, the balance sheet containing the profit and loss account clearly shows that the metro has undergone a loss of Rs 263 crores for the financial year of 2014-15 and Rs 83.18 crores for the financial year of 2013-14. This will affect the government in the long run and citizens will ultimately have to bear the brunt by paying higher fares.
That’s not all. Since 2013, a tax dispute of Rs 80 crore still remains unresolved. In case of an exchange rate variation, the financial burden will have to be borne by the BMRCL. The BMRCL have taken up the issue with the government, but the government remains mum.
Read: Q & A with Vasanth Rao, General Manager (finance), BMRCL: ‘Geology, not funds, the issue’
Sanjeev Dyamannavar, a transport activist and a member of Praja RAAG, an advocacy group, said, “Subsequently the BMRCL will be asked to pay and the state government will have to pay the entire amount. This means the burden will be shifted back to the people of Bengaluru who will have to shell out more money as fares. Just like how BMTC is dependent on the state government to buy buses, BMRCL too will be a liability on the government. The only difference being this will be a slightly more expensive affair.”
At this point one has to keep in mind that BMTC has been able to maintain its labour force properly, but BMRCL is bound by strict safety laws, so operating costs will be higher.
Again, the southern line from National College to Puttenahalli has been ready for three years. but there are many pieces of equipment that BMRCL has taken from BEML which are lying in Peenya depot. Some of them have surpassed their warranty, expiry date and insurance. How will the metro deal with this additional problem especially as it will inflate the final cost?
A BMRCL official on the other hand says there is no issue with meeting the operational cost, but the debt services are bothering them. They add that they do have the time to repay them. To this Sanjeev says, “Someone should read their balance sheet. There are loans outstanding, accumulated interests, operational losses, depreciation that include wear and tear of their equipment and maintenance costs.
“The operating loss is close to Rs 100 crores apart from a depreciation loss. The BMRCL did collect a huge sum of money initially, but they could not implement the project immediately, so they put that amount in a FD. “Now, they are claiming the interest earned from the FD, putting it under the category of revenue from other sources.”
What’s the point, when the government has borrowed that amount at a higher rate of interest for the metro to start work?
Until now, the metro has only opened in fragments — there are just five small stretches opened for the public, namely Reach 1 (MG Road to Byappanahalli, 6.7km), Reach 3 (Sampige Road to Yeshwanthpur, 5.1km), Reach 3a (Yeshwanthpur to Peenya Industry, 4.8 km), Reach 3b (Peenya Industry to Nagasandra, 2.5 km) and Reach 2(Magadi Road to Mysore Road, 6.4km).
Four major lines are yet to be completed and opened for the public. They are: Reach 4 (National College to Rashtreeya Vidyalaya Road), Reach 4a (Rashtreeya Vidyalaya Road to Puttenahalli), UG 1 (North-South underground line) and UG 2 (East-West underground line).
Will there be cost overruns and funding problems in Phase 2 too?
Now fear lurks in the minds of activists and citizens that Phase 2 will turn out to be the same, in which we will have cost overruns and struggle to gather funds. Interestingly, the DPR of Phase 2 started in 2010, the project was approved in 2014 and today we are in 2016. Since then the guidance value of land exchange and foreign exchange rates have gone tremendously high. The estimate was done when one dollar was the equivalent of Rs 50. But BMRCL have not bothered to come up with a revised estimate. It is clear that Phase 2 will not be completed within a cost of Rs 26,000 crore but might go up to Rs 35,000 crore.
Although BMRCL says funds should not be an issue for Phase 2, there is no clarity. An MOU has been signed with the French agency; talks are on with a Japan agency. Sources say the Japan agency will be releasing funds only on the condition of completion of Phase 1.
Again Pradeep Singh Kharola, MD of BMRCL says, “We are looking at big borrowings domestically since the exchange rate is fluctuating frequently. We hope to raise Rs 1,000 crore from bonds alone.”
Currently, the land acquisition has been completed in the Mysuru extension line and acquisitions are on the verge of completion at Whitefield. For the Kannakapura and Electronic City lines, tenders will be called in a day or two.