The metro project for New Delhi has hit a snag with the government of the national capital territory insisting on a route change.
The change will result in huge cost escalation as well as jeopardise the low-interest funding committed by the Overseas Economic Cooperation Fund (OECF) of Japan.
The state government, which is contributing 50 per cent of the equity, or 15 per cent of the total project cost, has sought the inclusion of the Patel Nagar-Tilak Bridge sector in the project.
This is expected to increase the total distance by 12 km.
The total distance of the project at present is 55.3 km with a surface corridor comprising both elevated and surface tracks and an underground corridor.
Sources said the inclusion of the new route would result in an increased capital cost of Rs 3,000 crore, besides an estimated cost escalation of about Rs 2 crore per day.
The Patel Nagar-Tilak Bridge sector is one the densest in terms of traffic movement. Consequently, the only option would be to build an underground passage as opposed to elevated or surface tracks, the sources said.
The state government demand comes at a time when the project management team has already shortlisted five consultants, three from Japan and two from the US, and frozen the project cost at Rs 4,860 crore after attainment of financial closure.
It also implies that the entire project would have to be reappraised, the sources pointed out. The credit appraisal by the OECF would also have to be reworked.
The OECF has committed 56 per cent of the project cost _ 14.76 billion yen priced at 2.1 per cent with a 10 year tenor. With Japanese economic sanctions in force, new loans have already been put on hold. "The OECF's funding cannot be taken for granted if the project is to be revised," an official said. Engineering, procurement and construction contracts would also have to be put on hold, he added.
In addition, the cash flow generation of the project is also likely to be delayed. The project was supposed to have generated revenues from 2002 with the completion of the Shahdra-Teez Hazari corridor. The first phase of the project is expected to be completed by 2005.
The project's economic rate of return was estimated to be 26 per cent on the basis of the original cost estimates assuming a tariff of Rs 5 per passenger.
This will also have to hiked to ensure that the project earns sufficient revenue for repayment of the enhanced debt, assuming a passenger load of approximately 1.2 lakh each way.
