AP Govt. signs agreement with L&T for Hyderabad Metro Rail project

Artist's impression of the Hyderabad Metro Rail project.

The Andhra Pradesh Government today signed the concession agreement with L&T Hyderabad Metro Rail Pvt. Ltd for the development of the Hyderabad Metro Rail project in the public-private partnership (PPP) mode.

As required by the bid condition, Larsen & Toubro (L&T) has formed this special purpose vehicle company for developing the project on design, build, finance, operate and transfer (DBFOT) basis, a press release from the engineering and construction major said.

The agreement was signed by State Urban Development Principal Secretary T.S.Appa Rao and the Managing Director of the newly formed L&T Hyderabad Metro Rail Pvt.Ltd, Mr.V.B.Gadgil, in the presence of Chief Minister K.Rosaiah, Municipal Administration Minister Anam Rama Narayana Reddy, Ministers from the city D.Nagender, Mukesh Goud and Sabita Indra Reddy, Chief Secretary S.V.Prasad and L&T Financial Services Chairman Y.M.Deoasthalee.

Mr Rosaiah said the 71 km project would be one of the largest metro rail projects in the world and, in fact, the largest in the PPP mode.

He said that, out of the total project cost of Rs 12,132 crore, L&T had sought a grant of Rs 1,458 crore (12%) and this entire amount would be borne by the Government of India.

"Thus over Rs 12,000 crore will come to the state as investment from the private sector and the Central Government. This is the single largest investment in the state," he said.

According to the release, the project will generate employment for about 5000 engineers and about 45,000 skilled and unskilled workers. It would involve consumption of 26 lakh tons of cement; 2 lakh tons of steel; and 58 lakh cubic meters of concrete and this will result in establishment of many ancillary industries around Hyderabad and will give a big fillip to developmental activities in various parts of Telangana region, it said.

The project will cover three high density traffic corridors of Hyderabad -- Miyapur-LB Nagar (28.87 km); JBS-Falaknuma (14.78 km) and Nagole-Shilparamam (27.51 km).

The concession period is for 35 years (five years of construction period and 30 years of operations period) with a provision of extension for another 25 years, provided the concessionaire discharges its obligations without any material breach or default.

According to the release, any increase in the project cost shall be borne by the concessionaire.

The estimated traffic demand is 15 lakh passengers per day in 2014 and 22 lakh passengers per day in 2024.

The concessionaire can undertake real estate development upto a maximum of 18.5 million square feet, subject to the municipal bye laws, through utilization of air space over the 269 acres of land earmarked for rail facilities at its own cost. However, ownership of land and assets remains with Government and the concessionaire cannot sell the developed assets, the release said.

The concessionaire can rent out the air space after commencement of operations of the rail system and shall handover all the assets and the rail system to Government at the end of the concession period.

The concessionaire shall provide the Government a "Golden Share", which requires an affirmative vote of the Government Director for passing any resolution on any of the "reserve matters".

The project will have features such as air-conditioned coaches, modern signalling sysem, automatic fare collection system and inter-modal integration with rail terminals, bus depots, MMTS stations and feeder buses.

The fare structure consists of a minimum basic fare of Rs 8 and a maximum fare of Rs 19 in 2014. The concessionaire shall pay to the Government from 21st year onwards 0.5% of the Realizable Fare net of taxes and increasing it additionally 0.5% every year, subject to a ceiling of 10%.

L&T has to submit a bank guarantee of Rs 360 crore as performance security to the Government and achieve financial closure for the project within six months. It has to complete geophysical and traffic surveys, freeze metro rail viaduct alignment and various facilities of the stations and depots and submit thousands of detailed designs and drawings for approval of Hyderabad Metro Rail authorities, Indian Railways, National Highways and other connected government agencies.

The release said L&T had started shifting its key engineering experts from different parts of the country to Hyderabad. It has appointed its construction veteran V.B.Gadgil as the Managing Director of the new special purpose vehicle company to execute the project on fast track.

Simultaneously, the company is also vigorously pursuing with various government agencies and private individuals for acquisition of land and properties, widening of roads and identification of utilities for starting the ground works in January 2011, the release added.

NNN