Mass Rapid Transit System (MRTS)-Opportunities Unexplored:Suitable Financial Modalities for PPP Implementation

Mass Rapid Transport solutions such as metro rail, monorail network answers the transit needs of urban areas most effectively and has the potential to bring all round benefits to business, to environment and multiple benefits to people in all walks of life. Investment that is required is high even though there are many benefits. India being a developing country the sources of funds for financing such a project is limited. Public agencies inadequacy in provision of infrastructure support for urban development hardly needs any reiteration. Thus the dichotomy essentially points to partnership option where the public bodies look for a partner in the non-government sector for supplementing and channelizing its resources.

India has planned to build more Metro rail networks in the coming years due to greater deal of urbanization. It is planned that all Indian cities having population more that 2 million will have Metro rail network system .But despite the progress and benefits, financing of these Metro rail network is a big hurdle in front. The government has planned new Metro rail network in 17 different cities ranging for 934.77kms approximately and it would cost Rs.1,82,280(approx.).In order to effectively construct these planned Metro rail network and enhance development in the country, there is great importance in identifying financing models which will be viable to India (Ref - 2).

For construction of MRTS facilities and property development, a joint development approach through a "Special Project Vehicle" (SPV) is proposed. The partners in joint venture would be placed under a legal contract. The advantage of this organizational structure would be commitment of resources by all the stake holders and allocation of risks to those partners who are in better position to handle them. Working in a PPP mode means a new kind of relationship between private and public utilities which is quite at variance with their more traditional manner of dealing with each other. This paper will highlight on the PPP mode by considering the live example of L&T HMRL (Hyderabad Metro) into consideration and would make an attempt to simplify the financing model for others to emulate. The views expressed in this paper are entirely my own and few financial data have been referred from different metro experiences.