Mumbai

Metro Rail
Project GROUP – 8
Neeraj Gurbani A020
Akshiv Pathania A037
Sameer Sehgal A047
Karan Shah A050
Jinesh Vora A056
 Agenda

Mumbai Mumbai
Transport Metro : Project Financial
Infrastructur Conceptua Planning Structurin
e: Overview lization g

Key
Risk Learnings
Bidding Project
Managem &
Executio
ent Recommen
Proces n
dations
s
Mumbai Transport Infrastructure:
Overview
12.8 78.0
% %

9.2
%

Private Vehicle Intermediate Public transport Public transport

 13.0 million people travel

Suburban rail – 56% daily
by Public Transport
78%
 Train transportation – Lifeline
BEST – 22% of Mumbai

Mumbai is Public Transportation Dependent city

Mumbai Transport Infrastructure:
Loopholes
Rail Network:
 Failed to keep pace with demand
 Suburban rail traffic increased by 6 times while
the capacity increased by only 2.3 times
 4500/5000 travel per train against the
passengers carrying 1750 resulting in unbearable
capacity
overcrowding;ofStrong mismatch in demand and supply

Bus Network:
 Constraints to expand the existing road capacity to
meet the future demand
 Number of cars in Mumbai has grown by 51% in the
last six years; Resulting in road congestion &
Environmental pollution
 Not serving the purpose of the Feeder service to rail
network

Mumbai needs an efficient, economical and

environment friendly Mass Transit System
Mumbai Metro Project: Gap
Analysis
Serve areas not served by current Access to important industrial and
system commercial area

Higher capacity Additional 7 mn commuters

Time reduced to 21 min from 71 min

Faster travel
between Versova & Ghatkopar (Ph-I)

Provide a rail based connectivity within

Attractive to commuters
an approach distance of 1 to 2 km; Fare

Environment Friendly Reduction in air and noise pollution

Improve overall mobility East-West rail based connectivity to Central

and Western suburbs

Mumbai Metro is the best solution for Mass Transit System

Mumbai Metro
Overview 3 Phases
PHASE I
Total Length of 62.68 Km (approx)
• Versova – Andheri – Ghatkopar  11.07 Km
• Charkop – Bandra – Mankhurd  31.8 Km
• Bandra – Colaba  20 Km

PHASE II
Total Length of 40 Km (approx)
• Charkop-Dahisar  7.5 Km
• Ghatkopar – Mulund  12.5 Km
• BKC Kanjurmarg via Mumbai Airport – 19.5 Km

PHASE III
Total Length of 39.80 Km (approx)
• Andheri East – Dahisar East route  18 Km
• Flora fountain and Ghatkopar route  21.8 Km
Mumbai – Metro Phase I
PROJECT PLAN
Phase I Line 1 – Versova – Andheri - Ghatkopar
TIMELINE FOR THE PLANNED PROJECT
India’s first PPP Metro Project, based on the
Build, Own, Operate and Transfer (BOOT) model Govt. of Maharashtra approval 19th August, 2004
Invitation of Global Bids 21st August, 2004
Pre-bid meeting 23rd November 2004
Elevated 11 Km line to Ghatkopar via Marol,
Technical bids 16th May, 2005
Chakala and Saki Naka
Invitation of Financial Bids 15th September, 2005
Receipt of financial bids 10th January, 2006
AUGUST 2004 – Approval received from the Evaluation of Financial bids January, 2006
Government of Maharashtra and Global Bids Negotiations with the lowest February-May, 2006
were invited through Expression of Interest (EOI) bidder
Negotiated offer 10th May, 2006
LOI issued after GOM approval June 2006
SPV – Mumbai Metro One Private Limited
(MMOPL), a JV between Reliance Infrastructure, Commencement of Construction Feb 2008
Veolia Transport and MMRDA
EQUITY HOLDING (%)

Concession period of 35 years including the

construction period of 5 years
26 Relianc e
Infrastruc ture Veolia
%
Estimated cost of the project – Rs 2356 crores 5 69
Transport MMRDA

% %
FINANCIAL STRUCTURING
Line 1 – Versova-Andheri-Ghatkopar

Out of the total estimated

Total
project cost, cumulatively
project
27.5% was contributed as VGF
Cost
by the GOI and Government of
Rs 2356
Maharashtra
Crores
The remaining Rs1706 crores Remaining Viability Gap
was financed by 70% Debt –Rs. Rs 1706 Funding
1193 Cr and 30% Equity – Rs. Crores Rs 650
513 Cr Crores

70% 30% VGF

The 70% debt was provided
by a consortium of banks led
Debt Equity GoI-20%
Rs 1193 Rs 513 GoM-
by IDBI
Crores Crores 7.5%

Free of Cost: Consortium of banks

•Space for C ar Depot
at DN Nagar Station
and Ghatkopar Station
• Land for the project
IDBI, C orporation Bank, Reliance Infra - 69% ~ Rs.
Karur Vysya Bank, C anara 353 C r. Veolia Transport - 5%
Bank, ~Rs. 26 Cr.
Oriental bank of MMRDA - 26% ~ 134 C r.
c ommerce
and Indian Bank
Bidding – Metro Phase I Line 1
Eligibility Criteria First Stage-Technical Proposals

An Indian Company or a Company authorized to Evaluate Bids for Financial Capability and
carry out business in India or a JV with an Indian Technical Competence as per evaluation
Company
criteria

Net worth of more than Rs.5,000 million or US$ Scrutinize system design proposals for
112 million conformity - Technical and Performance
specifications

Annual Turnover for the last 3 years of more than Obtain bidders‟ confirmation to incorporate
Rs.3,650 million or US $ 81.0 million proposed modifications if any to provide level
playing ground

Relevant experience in developing, constructing

or operating a Mass Transit System with Those bidders scoring 75% and above in
minimum capacity of 20,000 PHPDT. technical evaluation were eligible to submit
financial proposal

Two Stage Process Second Stage-Financial Proposals

Technical Proposals Financial Proposals Evaluation of Business Plan & other

formats submitted as per RFP documents
 Bidding – Metro Phase I Line 1
Financial
Received Bids - 5 Technically Qualified - 3 Preferred Financial Bid
Proposals
Received - 2
"Mumbai Metro One "Mumbai Metro One
consortium” LED by consortium” LED by
Reliance Energy Limited Reliance Energy Limited
and Connex- France and Connex-France

“IICCU consortium” led

by Infrastructure Leasing &
Financial Services
Limited – ITD Thailand-
Unity Infra
Mumbai Metro Consortium”
led by Gammon Infrastructure
Ltd – Siemens and BEML

Hindustan
Construction
Company and RITES
Shaktikumar Sacheti Limited
and Lingkaran Metro
 Bidding Parameter - A bidder asking for minimum capital contribution to be selected as Preferred Bidder
 Details of Preferred Financial Bid- Cost- Rs 2356 Cr and Capital Contribution: Rs 1251 Cr
 Negotiated bid - Negotiations were carried out with the lowest bidder to reduce the capital cost. As a result demand
for capital contribution reduced from Rs 1251 Cr to Rs 650 Cr
 Approvals - Negotiated offer was evaluated by the Bid Evaluation Committee appointed by the Metropolitan
Commissioner
Bidding – Metro Phase I Line 2
Charkop - Bandra – Mankhurd corridor

Technically Qualified Bidders

Key Highlights of Project

Reliance Infrastructure-SNC „Concession period - 35

Lavalin, Canada-Reliance years with an extension
Project Winner
Communication clause of another 10 years.
Financial closure :
GE India-L&T-CA-IDPL Reliance Debt - Rs 6,931
Infrastructur Cr Equity - Rs
Tata Power-Mitsubishi- e 2,332 Cr
Tata Realty's Pioneer Only one that made Equity share : Reliance Infra -
Infrastructure a financial bid 74%
SNC Lavalin - 26%
GVK-Bombardier-YTL
Bid Implementation under PPP
format
Infrastructure Leasing & Project cost:
Financial Services Limited - Submitted MMRDA’s estimate : Rs 8,250
Soma Constructions-Punj Cr R-Infra’s estimate : Rs
Lloyd
Rs 2,298 Cr 11,000 Cr
The grant from VGF - Rs 1,532 Cr by GOI,
Essar-Alstom the state
& Central Rs 766 Cr by GoM
governments Construction work stalled due to
 Bidding – Metro Phase I Line 3
Eligibility Criteria Milestones in Bidding Process

Initial Eligibility Criteria
Average annual turnover of
$175 million for five years
generated specifically from
the execution of
underground railway works,
excluding hill tunnels
All member companies of
a consortium or JV were
required to meet the
minimum experience
criteria individually
In technical qualification
the end date for
experience limit of
bidders for 10 years was
December 2012
Modified Eligibility Criteria • Invitation for the pre-qualification bids
Sept
Average turnover of $175 2013
million for five years • Expected Submission of bids
from billing for civil Oct 2013
infrastructure works • Expected Evaluation of Pre-Qualification of
completed or in progress Nov Bids
2013
• Re-Invitation for the pre-qualification bids
The combined experience Jan 2014
of a consortium was
required to meet the • Submission of pre-qualification bids
Mar 2014
minimum experience
criteria
• Expected Issue of detailed tenders
July
The end date for 2014
experience limit of • Expected award of contract to successful
bidders for 10 years Oct 2014 bidder
ending December 2012
• Expected Commencement of construction
was revised to March
Jan 2015 Phase
2013

 14 international and national firms have submitted the pre-qualification bids for detailed design and
construction of underground stations and associated tunnels for the project
 Bidders are as follows :
AFCONS-KMB, CEC-ITDCEM-TPL, CTCEG-PIIPL, Dogus-Soma, IL & FS-CR25G, J Kumar- CRTG, L&T-STEC,
MOSMETROSTROY-HCC, OHL-SKE&C, Pratibha-GDYT Consortium, Sacyr CMC ESSAR, Salin Impregilo-Gammon,
STRABAG-AG-Patel and UNITY-IVRCL-CTG.
Risk Management

Types of
Risk

Construction Time and Cost overruns or shortfall in performance parameter of the

Risk project

Operational Technic al performance of the project during the operational

Risk phase ca n fall below the levels projected

Market/ Possibility that the market conditions assumed in determining

Demand Risk the viability of the projects are not realized

Financial
Variation in Interest Rates and/or the risk of not being paid for
Risk services delivered by the investors

Any disruption in co nstruction or operation of an project due to

Political Risk politic al decisions
Risk Mitigation

• Identifying the events or actions which effects the viability of the

Risk
Identific project
ation

• Incase the event occurs, the effect of the same on the cost/time of the
Severity
of Risk project

• Identifying and allocating the risk to the party who can manage it the
Risk
Allocati best
on

• Steps/Actions which can be taken to reduce the chances of event

Risk
Mitigation occurring

• Cost of addressing the risk needs to be determined and suitable

Risk provisioning
Pricin made
g
Risk Allocation Framework
(1/2)
Risk Type Sensitivity Primary Risk Bearer Comments
Pre-Operative Risks
To be handed over to the concessionaire by MMRDA. If
Delays in Land unable to do so, MMRDA is liable to extend project
High Government completion date, financial closure date & concession
Acquisition
period

Has to achieve financial closure in 180 days after signing

Financing Risk Medium Private Sector the contract. Provision with MMRDA to extend the period
by another 180 incase not achieved

Need to execute the project in conformance with the

Planning Risk Medium Private Sector
specifications and standards specified in the agreement
Regulatory, Has to obtain all required clearances/permits from the
Low Private Sector
Approval Delays GoI/GoM for implementation of the project

Construction Phase Risks

Risk Type Sensitivity Primary Risk Bearer Comments
Have to submit all drawings and schedule to MMRDA for
Design Risk Medium Private Sector review. Also to be scrutinized by an independent
engineer

Performance security of Rs.14 crore for due and faithful

performance of its obligations. Renewed from time to
Construction Risk Medium Private Sector time and replenished every 30 days. Penalty of Rs.2
crore/day for missing any milestone

Additional work outside scope would be ordered by

Change in Scope
Low Government MMRDA performed by private operator and
Risk
subsequently reimbursed

Only 85% of VGF to be released during construction

Financing Risk Medium Private Sector period of the project. Remainder of funds after 6 months
of project being operational
Risk Allocation Framework
(2/2)
Risk Type Sensitivity Primary Risk Bearer Comments
Operational Phase Risks
Project to be executed in conformance with the
Technology Risk Low Government/Private Sector specifications and standards specified in the
agreement
TO submit an operations and maintenance manual to
O&M Risk Medium Private Sector MMRDA for approval. Risk mitigation by allowing
concessionaire to appoint O&M contractors
The private operator would be allowed to levy and
collect the fares. The fares would be revised at a rate
Market Risk High Private Sector
of 11% every fourth year. No revenue guarantee
from the government

Private operator has to hold at least 51% equity during

construction and in the 2 years after completion of the
Performance Risk High Private Sector project. Lead consortium member will have to hold at
least 26% equity stake in the project for a minimum
period of 15 years after project completion

Handover Risks
Risk Type Sensitivity Primary Risk Bearer Comments
Joint inspection by both parties 60 months prior to the expiry
of concession period to gauge compliance with
Handover Risk Low Private Sector
serviceability requirements defined in the agreement,
private party to pay charges if found deficient

Only lenders are protected to equity holders bear a major

Private Operator
Low Private Sector risk. MMRDA to take over the assets and is liable to pay
Event of Default
90% of debt less insurance claims
 Mumbai Metro Project: Execution
 2006: Former PM Manmohan Singh laid the foundation stone for Metro One project in June
 2007: Reliance Infra led MMOPL awarded the contract for developing the 11.4 km Versova-
Andheri-Ghatkopar (VAG) corridor
 2008: Actual construction on the project began in Feb 2008, and the corridor was expected to
be operational by 2010-end
However, MMOPL missed as many as 10 deadlines set for completion of the project
including the March 2013 deadline set by Maharashtra CM Prithviraj Chavan
 Reasons for delay:  Effects of delay:
 MMRDA supposed to make 59% land
available to MMOPL but could manage  MMOPL asking for steep increase in the
only 45% when construction began fare creating a controversy in the media
and asking for reimbursements for
 Complete land needed for construction expenses
could be handed over to MMOPL only in
2012  8 year delay and harassments for
Mumbai commuters on the affected
 ROW and legal issues with removal of stretch
encroachments and religious structures
also stalled construction progress
 Unavailability of records of underground
utilities forced MMOPL to change design
on numerous occasions
 Delay in safety certifications from RDSO
and Fire department
PRICING
Pricing Comparison
₹
45.00
₹
40.00
Mumbai
₹
35.00 (Proposed) Delhi
₹ Bangalor
30.00
e
₹
25.00 Chennai
₹
20.00 0-2 2 -4 4 - 6 6 - 9 9 - 12 12 - 15 15 - 18 18 - 21 21 - 24 24 - 27 27 - 31 31 - 3535 - 39
₹ 39 - 44 > 44
15.00
₹
10.00
₹
Cost Per Kilometre (Rs
5.00 Crores)
₹ 350
0.00 400 325

250 240
200

Mumbai Delhi Delhi (Underground) Bangalore Bangalore c hennai

(elevated) (elevated) (elevated) (Underground (elevated)
)
Comparison with other metros
Parameters Other Metro Mumbai Metro
Financial Viability Among 200 metro cities Very early to predict
– Hong
Kong,
Singapore, Tokyo, Taipei
have been
financially
viable
Cost Escalations It can happen because From 2346 Crores to
of delays in clearance 4200 Crores
Source of Revenue Ticket 5 – 10 % Ticket Sales
sales, Advertisement, Station
Advertisements naming rights
Fare Low as compared to Very high compared
other modes of to other metros in India
transport
Pricing Authority Government in most of MMOPL *
the projects
The project, which was under the Indian Tramways Act, was brought by the union government under
the Indian Metro Act in 2014, allowed MMOPL to fix its own fare structure in the absence of a fare
fixation committee
 Learnings & Recommendations

1. Expediting the bid process

 Entire bid process to choose the successful bidder took more than 2 years. This led to very
less no. of bidders bidding for the project.

2. Delay in obtaining VGF approval

 Substantial delay in obtaining VGF approval from the govt. because model concession
agreement was not in place.

3. Delay in getting approval

 Delay in getting approval for construction of over-bridge that passed over the railway line.
This was because railways were thinking of a project that could invade the path of the metro
line.
 It is recommended that authorities be cognizant of all other upcoming infrastructure projects
that have the potential to affect operations of the planned project while bidding out such
projects and resolve the same prior to the appointment of a developer.
Learnings & Recommendations
4. Land acquisition issues
 Land for the depot was under dispute.
 It is recommended in the future concerns such as these are addressed
before the project procurement stage itself to ensure smooth functioning of
the project.

5. Clear specification on Asset transfer on termination

 5 years before the expiry of the concession period a survey of the assets would be
carried out to determine whether they are in working condition as given in the
agreement. Schedule in the concession agreement does not have clear and robust
specifications. Risk of a difference of opinion between the concessionaire and the
government and this can potentially lead to a dispute.
 The government could manage this better by incorporating clear and robust
specifications on the condition it would want the assets to be handed over to the
government.
 Risk allocation has to be equitable; Tendency to pass on maximum risk to the
Concessionaire will prove counter productive.
References

http://timesofindia.indiatimes.com/city/mumbai/Metro-phase-III-tenders-to-be-issued-by-July-

2013/articleshow/32677654.cms

http://en.wikipedia.org/wiki/Line_3_(Mumbai_Metro)

https://mmrda.maharashtra.gov.in/home

http://articles.economictimes.indiatimes.com/2014-07-31/news/52285190_1_mthl-santa-cruz-chembur-link-road-sclr

http://toolkit.pppinindia.com/water-sanitation/module3-rocs-mm1.php?links=mm1

http://indiatogether.org/metro-fares-in-mumbai-and-other-cities-economy

http://www.mumbaimirror.com/mumbai/others/Mumbais-Metro-fare-is-double-that-of-other-cities-
MMRDA/articleshow/36318428.cms
Thank
you
Q&A