Delhi's 65-km metro cost the state and central governments Rs 10,500
crore. In comparison, Hyderabad is about to get a 71-km metro
without the central or state government paying a rupee. Instead, the
Andhra Pradesh government will receive Rs 1,240 crore (calculated at
present value) by simply giving the concession to a private
consortium.

The state cabinet approved the concession agreement and the winning
bid at its meeting in Hyderabad earlier this week. The winning
consortium is led by the city's Satyam [Get Quote] group, which has so
far focused on its software business.

This dramatic bid result was so unexpected that the bid documents
had not even considered the possibility of the government being the
net financial gainer. Instead, the central government had expected
to fork out about 20 per cent of the project cost of Rs 12,410 crore
as a capital subsidy, with the possibility of a further 10 per cent
funding from the Jawaharlal Nehru Urban Renewal Mission. The state
government, in turn, had been prepared to fork out about 10 per cent
of the project cost.

The combined saving for the Centre and state is, therefore, about Rs
4,800 crore or more, over and above which the state government will
now receive Rs 30,300 crore from the concessionaires over the life
of the concession. Discounted (at 13.5 per cent a year) to get its
present value, that money is worth Rs 1,240 crore today.

Officials who have steered the project argue that the Hyderabad
experience opens up a completely new way of building metro services
in the big cities, at zero cost to governments and city
administrations.

In contrast, Bangalore's 42-km metro is a state-funded project
costing Rs 6,500 crore. Mumbai has given the contract for the 11-km
first phase of its metro project (costing Rs 2,356 crore) to a
consortium led by the Reliance [Get Quote] Anil Ambani group, with a
government-paid capital subsidy of Rs 650 crore.

Five consortia had been shortlisted for the Hyderabad metro
concession, which is to run for 35 years, with a possible extension
by another 25 years. Of these, a GVK-led consortium did not bid
finally.

An Essar-Alsthom consortium asked for a subsidy from the government
of Rs 3,100 crore, while a Reliance Energy-Bombardier consortium
wanted Rs 2,811 crore. The bid that came closest to the one by
Satyam was from a Malaysian-led group which included Siemens and
Nagarjuna, which had offered to pay the government Rs 151 crore.

The tariff has been set at Rs 8 to Rs 20. The tariff on the Delhi
Metro for comparable distances is Rs 6 to Rs 22.

The project team that is celebrating its success now was led by NVS
Reddy, a railway accounts service officer in Hyderabad, while the
political leadership was provided by the Andhra Pradesh chief
minister, YS Rajshekhar Reddy. In Delhi, the mentoring with regard
to the concession agreement and the specifications manual was
provided by Gajendra Haldea of the Planning Commission.

Based on the success of the Hyderabad model, Planning Commission
Deputy Chairman Montek Singh Ahluwalia is understood to have written
to the Prime Minister, suggesting that this be the model followed
for other metro projects�a view that is apparently being
opposed by
the Ministry of Urban Development, which prefers the Delhi metro
model.

http://inhome.rediff.com/money/2008/aug/08hyd.htm

August 08, 2008 02:23 IST