Mumbai Metro Project On PPP Model

By Ketan Bhingarde Kushinjai Vasalya Navrattan Roshan Kritika Tiwari Tarun Anand

Mumbai Metro Rail Project:

Implementing agency: MMRDA Master Plan prepared by DMRC with the help of IIT Mumbai & TCS The main objective is to provide a mass transit connectivity to people within an approach distance of 1 to 2K.m. & to serve the areas not connected by existing Suburban Rail System Total corridors indentified in Greater Mumbai: 9 to be implemented in three phases, total length 146.5 km

PPP Structure of the Project

A concession agreement on BOOT basis for a period of 35 years Under the concession agreement, the operator has to design, finance, construct, operate, own and maintain the first corridor and transfer the ownership and assets at the end of the concession period. A Special Purpose Vehicle (SPV) named Mumbai Metro One Private Limited (MMOPL) has been formed with Reliance Energy Limited, Veolia Transport and MMRDA holding equity stakes of 69%, 5% and 26%, respectively.

Financing Information
The total project cost is estimated at 2,356 crores. The project shall be financed on the basis of a Viability Gap fund of 650 crores contributed by the Government of India (470 crores being 20% of the project cost) and Government of Maharashtra (180 crores being 7.5% of the project cost). The remainder is to be financed by 70% debt, 30% equity.

Financing Details:

Component Viability Grant Funding Debt Equity Total

Crore 650 1240 466 2356

Process Analysis

Conceptualization and Feasibility

The Government had been exploring the viability of various mass transit systems that are efficient, economically viable and environment friendly In this context, a detailed feasibility study was carried out under the Indo-German Technical Co-operation by entrusting the consultancy work to TEWET in association with DE-Consult & TCS, during 1997-2000.

 The study recommended a mass transit corridor from Andheri to Ghatkopar as potentially bankable and economically viable, after examining a number of alternative corridors and alignments. To manage the transaction process, a consortium consisting of Louis Berger as technical consultants, Price Waterhouse Coopers (PWC), Masons and Economic Law Practices was appointed in 2003-04 to assist MMRDA.

Process followed
GoI accorded approval to initiate Pre Qualification process subject to the condition that model documents finalized by GoI / Planning Commission will be followed. ThePre Qualification process started based on RFQ document of GoI. Concession Agreement finalized based on Bid Documents of Hyderabad Metro and drafts of Planning Commission. The documents submitted to Department of Economic Affairs (DEA) on 19th June 2008. Clearance was given by DEA in October 2008 after several meetings. The bid documents were issued to the bidders in October 2008

List of Technically qualified bidders

Hindustan Construction Company and RITES Reliance Energy Limited and Connex-France Shaktikumar Sacheti Limited and Lingkaran Metro

Siemens, L&T, Gammon, BEML

IL&FS and ITD Thailand and Unity Infraprojects

List of Financially qualified bidders

Reliance Energy Limited and ConnexFrance

Siemens, L&T, Gammon, BEML IL&FS and ITD Thailand and Unity Infraprojects

Award of Contract
After the bid process, negotiations commenced with the lowest financial bidder, i.e. Reliance Energy and Connex France. Veolia Transport and Hong Kong MRT The contract for construction of Mumbai Metro is finally award to Reliance Energy and Connex France after the negotiations

Development
The development phase of the project was initiated in parallel to the VGF approval process. Major milestones achieved in the development phase are presented below: The SPV was incorporated in December 2006.

The Engineering and Project Management Consultants, a consortium of Parsons Brinkerhoff (USA) and Systra SA (France) joined the team on February 14, 2007

 Signing of the Concession Agreement and Shareholders agreement took place on March 7, 2007

MMOPL and Government of Maharashtra entered the State Support Agreement on April 20, 2007
Construction commenced on February 8, 2008 Financial Closure for the project completed on October 3, 2008

Risk allocation framework

Pre-Operative Risks
RISK TYPE
Delays in land acquisition Financing Risk Planning Regulatory, administrative & approval delays

SENSITIVITY
High Medium Medium Low

RISK PERIOD
0 5 Years 0 5 Years 0 5 Years 0 5 Years

RISK BEARER
Government Private Sector Private Sector Private Sector

Construction Phase Risks

RISK TYPE SENSITIVITY RISK PERIOD RISK BEARER Design risk Medium 0 5 Years Private Sector

Construction Risk

Medium

0 5 Years

Private Sector

Change in scope risk Finance risk

low

0 5 Years

Government

Medium

0 5 Years

Private Sector

Operational Phase Risk

RISK TYPE SENSITIVITY RISK PERIOD RISK BEARER Technology Risk Low 0 35 Years Private Sector

Operations & Maintenance Risk Market Risk

Medium

0 3 5 Years

Private Sector

High

0 30 Years

Private Sector

Performance Risk

High

0 30 Years

Private Sector

Handover Risks
RISK TYPE SENSITIVITY RISK PERIOD RISK BEARER Handover Risk Low 35 Years Private Sector

Private Operator Event of Default

Low

0 35 Years

Private Sector

MMRDA Event of Low Default

0 35 Years

Government

Other Risks
RISK TYPE SENSITIVITY RISK PERIOD RISK BEARER

Interface Risk Medium (with other metro corridors) Force Majeure Low

Throughout

Private Sector

Throughout

Shared (Depending on the type of event)

Change in Law Risk

Low

Throughout

Private Sector

Current Status
The construction has commenced from February, 2008 and the project achieved financial closure in October 2008. The completion date for the project construction is expected by mid 2011. At present, the construction of the viaduct is underway with 773 piles being dug up. The construction of the Depot, Substation and Stations has also commenced along the route of the project. Work has also commenced on the construction of 2 overhead bridges at Andheri Station and the Western Express Highway.

THANK YOU.