Final - Hyderabad Metro case study on PPP infra Project.pptx

Hyderabad Metro case study

1. Presentation to Asian Development Bank Institute Hyderabad Metro : PPP Infra. Project (a case study) Part of assignments of course on “Applying Principles of Quality Infrastructure Development in Asia” : Oct - Nov. 2023 Group-1 Mr. Anil Kumar Verma, Dy CPM, NHSRCL Mr. Kappey Yadagiri, Consultant, NCGG Ms. Mohita Taneja, Sustainability Manager, CRISIL Mr. Sandeepan Roy, Assistant Professor, Mahindra University Mr. Satish Kumar Chourasiya, Dy CPM, NHSRCL Mr. Shubham Bhargava, Consultant, Tata Consulting Engineers

2. Brief description of the project Source – www.ltmetro.com

3. Brief description of the project Source – www.ltmetro.com

4. Salient Features of the Project World’s largest Metro Rail project executed in PPP mode. The Project on Design, Build, Finance, Operate and Transfer (DBFOT) basis. Out of the total cost of Rs.14,132 Cr (US $ 2.3 bn) (EXACT YEAR OF COST BASE RATE ?) , Government of India has sanctioned Rs.1,458 Cr (10%) as one-time capital grant based on competitive bidding. Concession for 35 years, extendable by 25 years. The remaining Rs.12,674 Cr (90%) is being invested by the Concessionaire M/s. L&T Metro Rail Hyderabad Ltd., a special purpose company of the Indian infrastructure and manufacturing giant L&T. Additional 1980 Cr being spent by GoAP for Land Acquisition, shifting of utilities, R&R, pedestrian facilities etc. Stations average interval @ 1KM – elevated stations with passenger access through staircases, escalators and elevators; Parking space and circulating areas - for multi modal integration at the stations; Frequency 3 to 5 minutes during peak hours. Expected to carry 22 lakh passenger/ day by 2024; Maximum speed 80 kmph. Average speed 34 kmph – an international standard for MRT systems. Source – www.hyderabadmetrorail.in

5. Private Partners Involved Source – www.ltmetro.com

6. Accelerating and Slowdown Factors Accelerating Factors Accidents – Increasing road crashes Demand Pressure – Increasing traffic Good Governance – Speedy decision making and problem solving. Encouragement of PPP by Government Availability of Specifications & drawings and simplified procedure of approval Social Engineering – Involving general citizens through different program, events and campaign Slowdown Factors Financial Challenges – Cost overrun due to difference in time of planning and the execution of metro. Environmental Challenges - Excessive production of Cement & Concrete Difficulties in Land Acquisition - cost escalation of over Rs 3,000 crore due to land not acquired. Regional and Political conflicts of Interests Gap between Planning and execution Stakeholder Management – As the DPR was kept hidden by the government Source – IJRTE (PPP for Metro Project – A case study of Hyderabad metro), L&T Metro Rail (Hyderabad) Limited

7. Revenue streams for L&T Metro Rail Hyderabad Limited Source: L&T Metro Rail Annual Report FY23, L&T Metro Rail website Fare collection rights QR Ticketing Smart Card Whatsapp e-ticketing Common mobility card Transit Oriented Development (TOD) assets Office space Retail Hospitality Healthcare others Retail activities at station Retail outlets F&B outlets Service outlets Others Rentals of fiber optic cables Right of way for telecom towers Exploring monetizing carbon credits. Advertising Rights business Advertising on smart cards and tokens Standalone advertisements

8. Facilities for Multimodal transportation at Hyderabad Metro Adequate parking and circulating area for linking with other modes of transport 05 Link to MMTS services at Bharatnagar, Begumpet, Khairatabad, Lakdikapul, Malakpet. 04 Efficacious integration & interchange with bus stations at Miyapur, Dilsukhnagar, MGBS, Jubilee Bus Station. 03 Effective integration & interchange with rail terminals at Nampally, Secunderabad and Begumpet. 02 All stations are have feeder bus service. 01 Source: Hyderabad Metro website

9. Contribution of Hyderabad Metro in attaining SDGs Metro Rail Hyderabad is committed to contribute in achieving Carbon Neutrality Stations have rainwater harvesting pits More than 1000+ saplings planted Regeneration of 40% of its traction energy through regenerative braking, which results in 30,890 t CO 2 emission savings. 8.35 MWp Captive Solar Power Plant in 2 Depots & on 28 Station Rooftops, which is > 10% of energy requirement Out of 57 stations, Hyderabad Metro Rail has its 23 stations IGBC Platinum certified. Key Initiatives Approx. 38 million litres of fuel saved. Approx. 88 million Kgs of CO2 emission saved; equivalent to planting approx. 1,750 trees Total 11 million units are generated through solar plant viz. 10% of total power consumption. Total 36 million units of energy regenerated by regenerative braking system of Rolling Stock viz. approx. 40% of total traction power consumption Contribution towards sustainable resource management

10. DEVELOPING QUALITY INFRASTRUCTURE UNDER PPP MODEL 10

11. TYPICAL CONTENT OF INVESTMENT PLAN IN PPP PROJECTS Pre - Construction Construction Post - Construction Stimulating factors - Encouragement of PPP through GOAP even after the failure of Maytas Group. Project alive with support in the form of regulations, well received from GOAP and was passed in the year 2008. Financial closure was obtained by L&T from a consortium of 10 banks of ₹ 14,132 crs. A well-structured PPP agreement was made for the said. Discouraging factors - L ack of detailed drawings for underground utilities was one of the challenges before the start of the construction of the Hyderabad Metro. Stimulating factors – Good governance, speedy decision making and solving the problems. Furthermore, In the Year 2014 the central government changed which led to generation of stable economics as in the previous government the inflation reached in double digits Discouraging factors - Andhra Pradesh divided into two states of Telangana and Andhra Pradesh. This created a cloud of political uncertainty for the project . Stimulating factors – Project incorporates various features like smart cards, free water, parking facilities, bicycle facilities etc. to provide end-to-end connectivity and increase the comfort level of the passengers. Discouraging factors - Ridership on April 27, 2019, was around 2.55 lakhs passengers per day against planned for the year 2017 was around 17 lakhs per day . The difference in time between the planning and execution of the metro has led to several of these problems.

12. TYPICAL CONTENT OF INVESTMENT PLAN IN PPP PROJECTS Analysis - ∙   R isk for PPP is high because of uncertainty of ridership, there also exists a need for low interest funding for the project to make the project more viable and to capture more participants for concessionaire. ∙       PPP projects can be a golden boon for metro projects for newly planned Special Investment Region (SIR), where it is relatively easy to obtain continuous Right of Way (ROW) and map for underground utilities ∙      Good Governance with stable socio-economic conditions can really prove to be the driving force for new PPP models in metros . Conclusion - ∙   The difference between the floating of the DPR and execution of metro should be as low as possible. ∙       For projects like metro, it is important to consider the public feedback before executing the project to avoid delay in the form of court order or public agitation. ∙      Political risk can be avoided if the metro alignment is thoroughly discussed with all the stakeholders before finalizing it . To boost PPP projects, there is a need for low interest loans from the banks. The idea of PPP projects for metro with planned commercial development can work for new growing cities in India. Dependency on the accuracy of the ridership is must before planning of project.

13. ECONOMIC ANALYSIS OF HYDERABAD METRO PROJECT-PPP COST BENEFIT ANALYSIS (CBA) – Tool to evaluate Net Social Benefits i.e. Hypothetical Values That Reflect Real Economic Growth. DIRECT USER BENEFITS IN-DIRECT USER BENEFITS Rail User Time Benefits Rail User Comfort Benefits Traffic Relief Benefits after Constructions Accident Avoidance Benefits Flood Mitigation Benefits Air Quality Benefits Construction cost – Rs 5949.94 crores ∙         Rolling stock –Rs 1810.85 crores ∙         Operating Cost- Rs 4322.40 ∙         Land costs in RoW- Rs 1043 crores ∙         Other land for stations Depot etc- Rs 2009.58 ∙         Social Distribution Cost – Rs 589.00 crores ∙         Severance Cost- Rs 1019.35 crores ∙         Traffic Delay Cost in Construction – Rs 469.41 crores ∙         Other Misc Cost - Rs 200.58 crores

14. SUMMARY OF ECONOMIC EVALUATION OF HMRP SUMMARY OF ECONOMIC COST OF HMRP - SUMMARY OF ECONOMIC BENEFITS OF HMRP - It can therefore be inferred clearly that the economic benefits of Hyderabad Metro Rail Project outweigh the economic costs.  The Cost-Benefit Ratio of 1.065 of the project implies that benefits are marginally higher than costs. Therefore, CBA>1

15. Lesson from History of Hyderabad Metro Lack of Transparency : Initially, Maytas led Infra consortium was selected as developer of Hyderabad Metro. Maytas was a subsidiary of Satyam Technologies, a software giant in 2009 in India. DMRC, the consultant in 2008, objected change in proposed alignment to suit commercial interest of Maytas, having big land pockets in those areas. Maytas lost metro project. PPP Project suffered for initial few years. DPR of Hyderabad Metro Kept hidden by Govt. even after application of various RTI due to fear of disclosing vital information of high commercial value. This case is a warning that metro projects under PPP should be available in public domain for transperancy Finally, L&T came in picture and begged Hyderabad Metro on PPP Source – www.hyderabadmetrorail.in

16. Financial Statistics & recent development L &T has started propositioning Hyderabad Metro P roject as an attractive investment to funds, maybe sovereign wealth funds, maybe PE funds, maybe some other REIT investors Started selling Land parcel attached to the metro project. 17 acres land parcel already sold. L&T is planning to revise tariffs in a bid to improve the viability of the project L&T has availed Rs. 900 crore of the Hyderabad metro soft loan, approved by the Andhra Pradesh government and has used it to repay the debt. L&T will work towards receiving a total of Rs 3,000 crore of soft loan from the Andhra Pradesh government which will be used to repay the debt. D aily ridership of Hyderabad Metro = 5.5 lakh passengers. In last quarter it was 5 lakh. A year ago, it was 3.5-3.8 lakh L&T is working to onboard a co-investor for Hyderabad Metro. It currently holds a 90 % stake, remaining 10% is with Telangana Government. L&T plans to bring down its stake to 51 % in the first stage of its divestment. Source – www.hyderabadmetrorail.in

17. Thank You