(FE)
The Cabinet on Wednesday approved a new metro rail policy, making private participation a must for states to get central assistance for new metro rail projects in the country. The policy will focus on innovative models of implementation and financing, as well as standardisation and indigenisation of hardware and software, to create jobs locally, finance minister Arun Jaitley said. “There will be a system-based approach (for sanctions of new projects). Economic internal rate of return (EIRR) should be 14% for approving new metro projects,” Jaitley said. Taking note of substantial social, economic and environmental gains of metro projects, the policy stipulates a shift from the present financial internal rate of return of 8% to EIRR, in line with global practices.
The policy empowers states to make rules and regulations and set up a permanent fare fixation authority for timely revision of fares. States can take up metro projects exercising any of the three options for availing central assistance: Public-private partnership (PPP) with central assistance under the viability gap funding scheme, grant by central government under which 10% of the project cost will be given as lump-sum central assistance and 50:50 equity sharing model between central and state governments. “Under the policy, states need to adopt innovative mechanisms like value capture financing tools to mobilise resources for financing metro projects by capturing a share of increase in the asset values through ‘Betterment Levy’,” the government said in a statement. States would also be required to enable low-cost debt capital through issuance of corporate bonds for metro projects, it added.
Metro rail projects are gaining popularity across the country with a total length of 370 km already operational in eight cities — Delhi (217 km), Bengaluru (42.3 km), Kolkata (27.39 km), Chennai (27.36 km), Mumbai (21 km), Kochi (13.3 km), Jaipur (9 km) and Gurugram (1.6 km).
