HMR cost to cross Rs. 20,000 crore

Delay drives up metro rail cost to 20K crore

BV Shiva Shankar, Times of India, Hyderabad, Jun 7, 2012,

HYDERABAD: Plagued by delays, the cost of the Hyderabad metro rail project has escalated to Rs 20,000 crore and is increasing by Rs 5 crore for each day lost. The present estimate is over three times the original outlay of Rs 6,200 crore, drawn up when the project was conceived in 2006. And, sources believe that the Rs 20,000 crore figure, too, is bound to rise sharply as there is no indication as to when the project would be taken up in right earnest. Needless to say, the burden of the increased cost will be recovered - indirectly - from the exchequer or through high fares for the passengers.

The project can properly kick off only from what is known in technical parlance as the 'Appointed Date'. This date can be declared only after the government is able to give Right of Way to contractor Larsen & Toubro. For those who came in late, Right of Way means that L&T can work unhindered on the project. However, for that to happen, the government first needs to complete the process of land acquisition for the project, which has been caught up in legal hurdles.

As per the agreement with L&T, the contractor has to complete the project within five years of the Appointed Date. Sources say that the government wants to fix an Appointed Date even though the process of land acquisition is incomplete. However, L&T is unwilling to proceed unless it gets Right of Way. Delay in the declaration of the Appointed Date, or the official commencement of the Metro Rail project, has forced L&T to revise its plans for incurring loans from banks. In a letter to the Hyderabad Metro Rail Ltd on Tuesday, L&T said that if the Appointed Date is declared this month, then the first stage of the project - the 8km stretch between Nagole and Mettiguda on Corridor 3 - will be operational by April 2015.

As per the concession agreement signed between the state government, L&T and the Hyderabad Metro Rail Ld (HMRL) on September 4, 2010, the work had to start on March 3, 2011, with the banks supposed to have disbursed loans in accordance with the withdrawal plan and the progress of the work. Now, with the original plan mired in problems, L&T has to submit a revised blueprint, which the authorities are presently working on.

"The banks want us to submit a revised plan for loan withdrawal given the delay in commencement of works due to which we were not able to take on the loan.  We will submit the revised plan in a week's time and, thereafter, the project will be fast-tracked," Vivek Gadgil, chief executive and managing director of L&T Metro Rail (Hyderabad), told TOI.

However, without the declaration first of an 'Appointed Date', the revised plan will be of little help as the banks are bound to insist on a fixed starting point which would allow them to calculate the deadline for the project.

"Some factors are in our hands and some are in the hands of the government. You have to ask them why there is a delay in the declaration of the Appointed Date," Gadgil said. He added that depot construction work was on in full swing at Miyapur and Nagole while recasting jobs for viaducts and the erection of piers, too, were underway.

Gadgil said that L&T had spent over Rs 500 crore on the project since the signing of the concession agreement on September 4, 2010.