New Delhi: E Sreedharan, famously known as the Metro Man, has always been a vocal critic of PPP (public-private-partnership). Therefore, his reluctance in executing urban rail projects on PPP mode is not new and if facts are to be believed the 85-year-old’s fear is not misplaced either.
According to latest media reports, the Metro Man has once again questioned the feasibility of PPP projects. PPP in India was tried out in Mumbai, Hyderabad, and the Airport line of Delhi, but the experience has not been good.
The Union Cabinet on Wednesday cleared a new metro policy under which the future metro projects will now be tendered after evaluating their social and economic impact in addition to considering financial returns.
Taking note of the substantial social, economic and environmental gains from Metro projects, the policy stipulated a shift from the present ‘Financial Internal Rate of Return of 8%’ to ‘Economic Internal Rate of Return of 14%’ for approving Metro projects, in line with global practices.
The policy opens a big window for private investments, making the PPP component mandatory. “Private participation either for complete provisioning of Metro rail or for some unbundled components (like automatic fare collection, operation and maintenance of services, etc) will form an essential requirement for all Metro rail projects seeking Central financial assistance,” the new policy said.
The new policy provides for a rigorous assessment of new proposals and also proposes an independent third-party assessment by government-identified agencies.
Sreedharan has even said that no private company will come forward for construction of Metro rail as it is not a profitable investment. This could also be true since the metro projects are left to be taken up in tier II cities where the traffic volumes may not be as high as in Delhi and Mumbai.