Report and Recommendation of the President to the Board of Directors
Project Number: 43912 March 2011
Proposed Loan Bangalore Metro Rail Transit System Project (India)
In accordance with ADB’s public communications policy (PCP, 2005), this abbreviated version of the Report and Recommendation of the President excludes confidential information and ADB”s assessment of the project or transaction risk, as well as other information referred to in paragraph 126 of the PCP.
CURRENCY EQUIVALENTS (as of 31 January 2011) Currency Unit Re1.00 $1.00 – = = Indian rupee/s (Re/Rs) $0.0218 Rs45.9 ABBREVIATIONS ADB ASI BMRC CPS DMC DMRC EBITDA EIRR ha IEE JICA km ODA PAU PPP – – – – – – – – – – – – – – – Asian Development Bank Archaeological Survey of India Bangalore Metro Rail Corporation country partnership strategy developing member country Delhi Metro Rail Corporation earnings before interest, tax, depreciation, and amortization economic internal rate of return hectare initial environmental examination Japan International Cooperation Agency kilometer official development assistance project administration unit public–private partnership NOTES (i) The fiscal year (FY) of the Bangalore Metro Rail Corporation ends on 31 March. FY before a calendar year denotes the year in which the fiscal year ends, e.g., FY2010 ends on 31 March 2010. In this report, "$" refers to US dollars.
Gupta. Principal Safeguards Specialist. H. Greenhow. Zhao. PSOD B. SARD A. Principal Treasury Specialist. Finance Specialist. Safeguards Specialist. SARD M. Gregori. Counsel. Huang. SARD R. Peri. Principal Private Sector Development Specialist. Venkatachalam. Private Sector Operations Department (PSOD) S. Rahman. Perera. Office of Regional Economic Integration
Team leaders Team members
In preparing any country program or strategy. Treasury Department J.Vice-Presidents Directors General Directors
L. Private Sector and Cofinancing Operations X. Financial Sector and Trade. SARD R. the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area. Unit Head. PSOD A. PSOD A. financing any project. Sharma. Public Management. Hoshi. SARD M. Carrasco. or by making any designation of or reference to a particular territory or geographic area in this document. Investment Specialist. Senior Finance Specialist (Infrastructure). SARD H. Principal Investment Specialist. Senior Director.
. Operations 1 P. Erquiaga. Project Administration. South Asia Department (SARD) M. Barrow. Mehta. Mahurkar. Private Sector Infrastructure Operations 1. Office of the General Counsel E. Barba. PSOD S.
CONTENTS Page PROJECT SUMMARY I.
A. Design and Monitoring Framework 2.
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Project Description Development Impact Environment and Social Dimensions Implementation Arrangements
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BACKGROUND AND RATIONALE A. B. Summary Poverty Reduction and Social Strategy
. C. C. B.
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II. B. D.
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Project Identification and Selection Sector Background Alignment with ADB Strategy and Operations
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THE PROPOSED ADB ASSISTANCE
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The Assistance Justification for ADB Assistance Assurances
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and economic losses through time wastage. creates a self-sustaining model for financing urban transport projects. The project includes the development of 42. which uses sovereign loans and support to leverage commercial lending. environmental degradation. With increased urbanization. It also mitigates environmental pollution by providing an alternative to private vehicles. This stimulates traffic delays. this can be a Benefits barrier to equitable and widespread economic growth and is leading to increased private vehicle use. electromechanical system.3 kilometers (km) of metro rail corridors. and are the ones which least lend themselves to up front private sector
. based on an innovative urban transport financing model. employment generation. This is a first for India and could become a model for infrastructure development in other states and cities. The project directly addresses these challenges to Bangalore’s growth and environment by creating a modern mass transit system that supports economic growth. 32 elevated. 40 stations (1 at-grade. The project structure. The focus is on creating a commercially viable and bankable project that can successfully attract commercial debt. signaling. regional (low) Environment: Involuntary Resettlement: Indigenous Peoples: B C C
Environmental and Social Safeguards Classification Project Description
The project is the development and operation of an urban metro rail transit system in Bangalore city (also known as Bengaluru) comprising two intersecting corridors (north–south and east–west). These projects are typically amongst the most difficult infrastructure projects to finance. inefficient fuel consumption. and which holds the potential for future wider private sector participation.
Impact. widening access to markets and economic opportunities). and equitable connectivity. national (medium). The project will establish an ultimately sustainable urban transport company with sound institutional and governance structures.PROJECT SUMMARY Borrower Classification Bangalore Metro Rail Corporation (BMRC) Targeting classification: General intervention Sector (subsector): Transport. 2 station depots. and information and communication technology (urban transport) Themes (subthemes): Economic growth (promoting economic efficiency and enabling business. and Urban centers in India suffer from a lack of mass transit public transportation systems. environmental sustainability (urban environmental improvement) Location impact: Urban (high). and all ancillary facilities and rolling stock. Outcome. and 7 underground stations).
and travel delays. BMRC has been constituted as a special-purpose vehicle with both sponsors having an equal shareholding. capital structuring. ADB support provides crucial credibility to the project which has several pioneering features. improvements in air quality and public health. as well as the training of operation and management personnel. The public sector approach. It is also one which should help catalyze commercial debt and private sector participation on a much wider basis across the country in future. robust institutional accountability. which are suffering from public transport gaps and exponential private vehicle growth leading to increased pollution. financial sustainability. and commissioning of the project. Procurement of goods and services is being undertaken by BMRC through international competitive bidding.000. and overall efficiency in operations. Given the importance of the project and the impossibility of financing it on a stand-alone basis. Successful implementation will set the precedent for similar financing models for urban transport as well as provide cost-effective connectivity solutions for middle-sized and large Indian cities. accidents.
Justification / ADB Value-Added
. is viewed as the best model for this sector at this stage of development in India. and due diligence will help mobilize long-term debt funding and catalyze domestic financial institutions to consider long-term loans for the project and other similar projects. The sponsors have drawn together experts from various agencies and have engaged an external technical consultant to carry out the design of the metro rail transit system and assist BMRC with procurement. construction. ADB will provide a direct secured loan (without sovereign guarantee) to BMRC of up to $250. The project’s compliance with ADB’s requirements will help promote strong governance. ADB’s participation. Around 80% of construction contracts have been awarded and about 33% of physical construction has been completed as of end December 2010. Project Sponsors Proposed ADB Assistance Implementation Arrangements The Government of India and the Government of Karnataka. the sponsors have committed significant support to the project in the form of equity and subordinated debt. This will lead to fuel savings. with private sector structures and discipline and possible future private sector direct participation. time savings.000.ii participation. including lending and institutional structures. and less accidents and fatalities. Implementation of the project will result in a modal shift toward public transportation and lower levels of congestion with a substantial reduction in the number of buses and use of private vehicles.
I. a final phase of technical. Given the need for effective public transport solutions to meet the increasing urbanization-driven challenges in the city. through a number of technical assistance programs. B. BACKGROUND AND RATIONALE
Project Identification and Selection 1. social. whether through commercial nonrecourse debt or public–private partnerships (PPPs). Project Development
2. and onlending from the national government of the Japan International Cooperation Agency (JICA) official development assistance (ODA) loan.. nonsovereign public sector loans. Discussions were also held with the national government’s Ministry of Urban Development on possible financing models. and ADB.e. 2007. 2. and leverage these so as to also raise commercial debt from banks and/or private financing sources. government subordinated debt. 1 has been assisting the national government since 2007 in developing bankable infrastructure project models able to access new financing sources without recourse to sovereign government guarantees. The possible use of ADB’s new lending modalities. Unlike the Delhi metro that is fully funded by government equity and sovereignguaranteed debt. Pilot Projects Initiative: Mainstreaming PPPs in India. i. Manila. Due diligence and structuring assistance to BMRC to help develop a bankable and leveraged financing model for the project was provided by the ADB team and consultant financial modeling specialists.
. it also creates a better urban environment by reducing congestion and pollution. I submit for your approval the following report and recommendation on a proposed loan to the Bangalore Metro Rail Corporation (BMRC) for the Bangalore Metro Rail Transit System Project. the national and state governments decided to create a new financing model for the project which would only partly rely on government funds (through a mix of government equity. Government Financing Approach and Asian Development Bank Involvement
ADB. Apart from allowing direct and efficient travel. The rail-based mass transit system was viewed by the sponsors as most appropriate for the city. Metro Rail Systems
5. A. The Asian Development Bank (ADB).
4. the Government of India and the state government (sponsor(s)) examined a number of possible urban transport solutions for the city. Sector Background 1. Initial discussions were held with the national and state governments and BMRC in early 2009 with a view to including the project under this proposed assistance modality. Developing Urban Bankable Projects. After preliminary national government approval of the initial structuring model for BMRC and the acceptance of nonsovereign public sector lending modalities for the project.
1. was a factor in this structuring decision. Manila. and environmental impact assessments was undertaken. Urban transport is a critical component of urban services. 2009. including different modalities.
The development of urban rail systems. However. With increasing road congestion and pollution. Road vehicles are a significant source of air pollution and their proliferation leads to a degraded urban environment and attendant diseases. 3 The proliferation of personal modes of transport (such as cars and two-wheelers) is therefore an immediate concern. Chennai is following a similar model in collaboration with the national government. are a mode of choice for large cities with high passenger traffic densities. cities are being forced to examine and develop better means of transportation.nic. While those using personal vehicles (such as cars and twowheelers) are also affected. but the city of Kolkata developed India’s first new metro rail system implemented by Indian Railways. The Delhi Metro Rail Corporation (DMRC) developed its large metro system for Delhi as a stand-alone project. and Chennai. since most cities in India have a modal share of public transport of only about 50%. In India. While public buses are generally available. and lower levels of local pollution. A white paper on pollution in Delhi. Subsequent to this.html. operation. The implementation. with the result that many metropolitan cities depend predominantly on private transport modes. Kochi.in/divisions/cpoll/delpolln. 9. in developing countries there has not been enough emphasis on mass transit or integrated city planning. and other cities are examining development of metro rail systems. operation.
. Therefore. the proportionate impact on urban poor people is possibly far higher due to their not having access to personal vehicles. and safety regulations for metro systems. tariff fixing. White Paper on Pollution in Delhi. Jaipur. prior to the changeover to compressed natural gas for buses. 6. Bangalore proposed a metro system through a joint-venture initiative between the national and state governments. Mumbai. 2
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The act deals with the implementation. http://envfor. With an Action Plan. showed that pollution by road vehicles accounted for more than 60% of total air pollution. reduced operating costs. The lack of a public transport system that efficiently and economically services all parts of the city seriously impacts the poor. Government of India. thereby attracting investments and contributing to economic growth. maintenance. Rail-based urban transit systems have an advantage over roadbased systems in terms of efficiency and carrying capacity. given the fact that most of the buses are not air-conditioned. and a subsequent amendment to this act in 2009 extended its reach to other metropolitan cities such as Bangalore.
8. most large cities have railbased mass transit railways as the core of their transport systems. 7. travel by buses through congested urban areas takes more time and is also not comfortable over longer distances.2
Economic benefits of rail systems are significant and include savings in travel time. and safety aspects of metro systems are covered under this act. has seen city administrations taking increasing responsibility for urban transport development under the Indian Tramways Act of 1909 and other subsequent acts. The Delhi Metro Railway (Operation and Maintenance) Act 2002 was specifically enacted to address the needs of a metro system in Delhi. especially when catering to heavy passenger traffic in densely populated areas. The higher level of connectivity and efficiency makes the rail system more attractive to businesses and tourists. Mumbai and Hyderabad have awarded metro systems through a PPP approach as build–operate–transfer projects. Mumbai and Chennai had the legacy of a suburban rail system. previously under the ambit of the Indian Railways Act 1989. In developed countries. rail-based metro systems. Ministry of Environment and Forests. safer transportation with lower levels of accidents and related fatalities. with their substantial carrying capacity.
A well-planned intermodal transit system combining buses and rail-based systems will also need to be built across the city. Without such a system. land development rights on additional land given to the project. The Kolkata metro was taken up by the Ministry of Railways as a national government project. at the planning stage. the Bangalore Metropolitan Transport Corporation was closely involved with the BMRC for planning the bus schedules and routes. either directly or through sovereign-guaranteed loans. while in Delhi. the national government has agreed to participate in a joint venture with the state government (owned equally). 13. Since most funding has to come from governments and resources are constrained. or adding buses to the fleet. given the very substantial up front capital investment requirements for metro projects and the social and economic limitations on fares and passenger trips.3
10. the significant funding constraints have yet to be addressed. a clear opportunity and growing desire for commercial finance to step in and bridge some of the gap. the national and state governments set up a joint venture and the national government provided sovereign-guaranteed debt. the focus has traditionally been on small-scale urban transport improvements such as widening roads. Financing Constraints for Metro Rail Systems
12. it will provide a high-capacity transport corridor along specific arteries of the city.070 billion ($45 billion equivalent) need for urban transport infrastructure investment in cities with populations of 100. investment requirements are accelerating beyond government financing capacity and the Ministry of Urban Development has estimated a Rs2. and other cities such as Bangalore and Mumbai. and PPPs is critical to build and operate metro systems. which will draw a large proportion of users from the roads. and/or other revenues from commercial development of land in the station areas are seen as essential to ensure viability and bankability. 3. short-term financial viability of metro systems worldwide is rarely achievable. taking the metro as the high-density traffic corridor. and the onlending of the JICA ODA loan. While a metro system cannot by itself address all of these severe problems. therefore. There is. Leveraging of government grants. with viability support coming from the national and state governments. While most large cities and governments have realized the importance of having a metro system as a key element of any urban transport system.000 or more in the period 2008−2028. The need therefore for other solutions such as commercial debt. the funding constraints remain. Delhi. However.
. While a number of cities have developed plans for metro projects. In the case of Bangalore. especially in the initial years of operations. revenue support schemes. However. The most recent projects are seeking commercial finance through debt (Bangalore) or debt and equity (Mumbai and Hyderabad). The gradual shift from government direct funding to sovereign-guaranteed loans and then commercial finance is illustrated by the cases of Kolkata. generally the rail-based systems cater to the higher traffic density corridors. subordinated debt. governments are no longer in a position to finance all such projects. the effectiveness of the metro would be much lower. 11. The few metro systems developed in India have been funded by the government. while the buses act in the proximate areas as feeders to the rail system. Key stations such as Majestic and Byappanahalli are being developed as intermodal centers where the public transport for rail and road are closely integrated. In the case of Bangalore. private funds. With these rising needs. One reason why many cities in developing countries have not built metro systems has been the high initial cost. constructing grade separators. Such improvements have not been able to address or catch up with the escalating scale of the problems. and also to support the project by way of equity.
2008. 2009–2012.. BMRC. The strategy also envisages ADB helping DMCs move their economies onto low-carbon growth paths by modernizing public transport systems. ADB can assist DMCs and their municipalities address a range of environmental problems resulting from rapid urbanization. Given the challenges facing India and the world due to climate change and degradation of the environment. 2. BMRC is a public sector entity wholly and jointly owned (50:50) by the national and state
ADB. 5 The project strongly supports the CPS. agriculture. and environmental sustainability—have been mainstreamed within the sector road maps in the CPS. for example. an entity incorporated in India under the Companies Act 1956. Strategy 2020: The Long-Term Strategic Framework of the Asian Development Bank. catalyzes investment. Consistency with the Country Partnership Strategy
15. 2008–2020. Development of urban transport is one of the focus areas of urban infrastructure under Strategy 2020. The Borrower and Sponsors THE PROJECT
17. The national and state governments proposed that the project should be implemented through a special-purpose company. energy. and water resources management). 4 ADB investment in infrastructure is fundamental to achieving poverty reduction and inclusive growth and also contributes to environmentally sustainable growth and regional integration. ADB. Manila. The proposal for a metro system in Bangalore was cleared by the state government in March 2005 and the national government in April 2006. ADB’s infrastructure operations are not to be limited to building physical assets. The project is. requiring over $500 billion over a 5-year period (2007–2012).
16. 2009. transport. urban. A. and facilitates private sector participation in infrastructure development. Crosscutting themes—such as private sector development. gender and development. III. The project enables better leveraging of scarce sovereign resources. Country Partnership Strategy: India. but will also include improving the delivery of infrastructure services through. Project Description 1. will be the borrower for the project. and promoting institutional and policy reforms that enhance the operational efficiency and sustainability of infrastructure projects.
Alignment with ADB Strategy and Operations 1. Consistency with Strategy 2020
14. including support for inclusive and environmentally sustainable growth. Manila. This includes supporting cleaner modes of transport. As stated in Strategy 2020. therefore. consistent with meeting the objectives of infrastructure development in an environmentally sustainable manner through nonsovereign participation.4
C. Under Strategy 2020. and spurs private sector and commercial funding for infrastructure projects. The country partnership strategy (CPS) 2009−2012 is in line with the national government's aims for infrastructure development. which emphasizes infrastructure development (e. building the capacity of developing member countries (DMCs) for better infrastructure management. the environmental focus of the CPS includes a program to lower pollution and greenhouse gas emissions by strengthening rail and urban transport infrastructure. ADB’s infrastructure operations will promote private sector engagement in financing infrastructure to augment the supply of capital for infrastructure.
The DMRC has been actively involved in assisting BMRC in planning.8 km underground portion. The project outcome will be an efficient. Parsons Brinckerhoff International (United States). including that of the general consultants.2 km. The major components of the project are as follows: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) An east–west corridor of 18.
20. The operations plan envisages a 3. and financially stable urban transport system for Bangalore. A signaling and telecommunications system consisting of continuous automatic train control with cab signaling. design. An automatic fare collection system with 6−9 ticketing gates per station. End-toend travel time is 33 minutes on the north–south line and 44 minutes on the east–west line. including a 4. environmentally friendly. Initially 168 rolling stock units (cars) for initial operations. with a maximum of 80 km per hour. a centralized train control system comprising automatic train protection. Subsequently.000 peak-hour peak direction traffic.0 km underground portion and interconnection between corridors at Majestic. and 7 underground stations. the JICA ODA loan also has procurement covenants and therefore all procurement. Karnataka is one of the few states in India to have specific legislation for transparent procurement processes and penalties for violation thereof. Project Design
18. 2. comprising 56 trains of 3 coaches each.1 km. 32 elevated stations. well-used. in line with projected demand. has been carried out transparently through open tenders. and is a rigorous third-party examination. and automatic train supervision. In addition. The project will develop the physical infrastructure for a metro rail system for Bangalore and will operate the system as per the design parameters. this will be increased to 56 trains of 6 coaches each with a total of 336 cars.0-minute gap between trains with 31 trains on the north–south line. and procurement. design. procured under the JICA guidelines through a transparent process.
19. Electrical works consisting of 750 volts direct current third rail traction and power supply. and SYSTRA (France). and a 3. Better connectivity and efficiency in the
governments. Procurement in relation to all the construction contracts has been conducted through open tenders on a transparent basis. The scheduled speed is 32 km per hour. Depots at Byappanahalli and Peenya.
22. A north–south corridor of 24.3 minute gap with 25 trains on the east–west line. and supervision of the works are the responsibility of a technical consultant engaged by BMRC (general consultant). BMRC’s procurement processes are dictated by the Karnataka Transparency in Public Procurement Act (1999). and the managing director is a senior civil servant from the Indian Administrative Service. including a 4. BMRC’s board is chaired by the secretary of urban development of the national government. BMRC’s audit is carried out by the comptroller and auditor general of India. 3. The planning. The metro rail transit system has been designed to meet a capacity of 40. One at-grade station. Project Outputs and Outcome
21. The general consultant is a consortium of RITES (India). Oriental Consulting Company (Japan).
Evidence indicates a direct cost of congestion of around 2% of gross domestic product per year. Public transportation networks (i) enable access to more productive urban space usage and improved densification patterns. The project structure. this is expected to reach 40% of the total population. Sustaining Economic Growth. improving the image of a city. especially the poor and middle-income groups. with a fourfold increase in average national income. B. but it brings enormous challenges. which public transportation systems can help alleviate. The project will demonstrate the functioning of a sustainable urban transport company with adequate institutional and governance structures and an innovative urban transport financing model. It will provide a successful modality for public transport which can be replicated in other cities.
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McKinsey Global Institute. It is estimated that by 2021 usage will be around 2 million passenger trips per day. Efficient transport systems save travel time.6
transport systems will make the city more attractive for business investments and contribute to economic growth. The project will increase the share of public transport in total intracity passenger movements and improve the environmental quality of the city.
2. India's Urban Awakening: Building Inclusiveness. and (iv) provide connectivity solutions for all. and the underlying modal shift from private to public modes is expected to be 10%−15% for BMRC alone (not factoring in any new line developments). The successful implementation of the project should lead to its replication and catalyze commercial debt and private sector participation in the sector in other places. (iii) save fuel. Of 5. (ii) mitigate environmental pollution in areas where vehicular emissions are significant.com/mgi/reports/freepass_pdfs/india_urbanization/MGI_india_urbanization_fullreport. The number of urban households is expected to increase from 22 million in 2010 to 91 million in 2030. 60 metropolitan cities will have populations exceeding 1 million.
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24. The focus of the project is to create a commercially viable and bankable project vehicle that can successfully attract commercial debt. and equitable connectivity. of which public transportation is an essential component. http://www.
Widening Access to Markets and Economic Opportunities
25. Contribution to Economic Growth and Poverty Reduction
. employment generation. Growth of the urban areas is therefore vital for India's economic growth and for an equitable distribution of growth.mckinsey. creates a self-sustaining model for financing urban transport projects. leveraging sovereign equity and loans with commercial lending. making city workforces more productive. urban areas require adequate and suitable infrastructure. with 28% of the total population living in urban agglomerations. and making a city a more attractive place for investment and business. It also mitigates environmental pollution by providing an alternative to private vehicles. Development Impact 1. and this is expected to reach 70% by 2030 and generate 70% of new employment. not least to effective transportation.pdf. 6 Forty metropolitan cities 7 with a population of more than 1 million account for 35% of the urban population. The project’s direct development impact is that it creates a mass transit system that supports economic growth. India's economic growth over 2001−2008 has spurred rapid urbanization. living in urban areas by 2030. It is expected that by 2030. or around 590 million people. To contribute to growth. Urban India contributes 58% of gross domestic product. 2010.161 urban agglomerations.
and survival rates. time savings. which is a heritage structure as per the Archaeological Survey of India (ASI). 30. improvements in air quality. The project management has ensured that adequate mitigation measures have been taken to reduce these impacts. including noise reduction measures through installing soundproof walls and soundproofing pads. maintenance depots. and casting yards. The project has been classified as category B for environment under ADB’s Safeguard Policy Statement. The ASI has already accorded a formal clearance to BMRC to go ahead with the construction based on the National Physical Laboratories study findings. Tree cutting along the alignment has been addressed through better route planning to avoid or bypass areas with thick vegetation and the implementation of compensatory forestation programs (on a 1:10 basis) in pre-identified public areas. density. Temporary adverse environmental impacts are expected largely during the construction phase of the project involving elements such as the elevated and underground sections of the metro rail alignment. and lower use of private vehicles. According to initial environmental impact assessments. and air quality monitoring equipment placed all along the alignments. In accordance with ADB’s Safeguard Policy Statement (2009). The Indian Institute of Science in Bangalore was appointed to monitor the groundwater level and quality during construction. leading to fuel savings. 31. but BMRC has proposed the creation of an environmental and social management division that will ensure not only project compliance with ADB’s environmental and social safeguards but also the development of emissions monitoring for the city over the long term. Implementation of the project will result in a modal shift toward public transportation. Many of these benefits are difficult to quantify. and lower levels of accidents. Debris. 28.7
3. lower levels of congestion with a substantial reduction in the number of buses. an initial environmental examination (IEE) was carried out. The project is expected to contribute to significant environmental improvements for Bangalore city. has been addressed on the basis of mitigation measures to minimize vibration impacts as recommended by the National Physical Laboratories and the ASI clearance conditions. stations. C. spoil generation and disposal from tunneling of underground sections will be mitigated by sound disposal in low-lying areas in the south of the city approved
26. A decrease in noise and air pollution along with reduced average fuel consumption is expected because of reductions in projected traffic growth volumes on the transit corridors (in a without-project scenario). 29. BMRC has already incorporated several measures to mitigate any environmental impacts. Environment and Social Dimensions 1. Some of the significant impacts and mitigation measures related to the project alignment are as follows: (i) Proximity (about 40 meters) of one of the underground sections to the Tipu Sultan Palace. Environment
27. The plantation program was verified and found satisfactory in terms of native species.
32. The total number of affected households is 1. affected slums were rehabilitated through a new housing scheme developed in the Peenya area where the slum dwellers have been allotted housing. This is consistent with international best practices. BMRC has its own environmental and social institutional capacity to coordinate and supervise the implementation of environmental management plan measures. Rehabilitation packages. Social Dimensions
33. health and safety audits. The total length of the project corridor (metro line) is about 42. at par with the ADB’s requirement under ADB’s Safeguard Policy Statement. and provide periodic reports to BMRC.8
by the Bruhat Bengaluru Mahanagara Palike (civic administration). The social due diligence audit included consultations with affected local people to assess views on property acquisition. 35. hospital. which have also been positively highlighted in the local media. have been paid simultaneously with the compensation. right to salvage material. A social due diligence audit has been carried out to assess whether land acquisition and resettlement processes and their implementation complied with ADB’s Safeguard Policy Statement and government guidelines. The compensation was paid at replacement value. There were 875 land parcels affected. 30 ha of land was private land and the remaining 94 ha of land was government land. These have been found to be largely favorable towards the BMRC processes. 2. resettlement. The IEE prepared for the project captures all the above and will be disclosed on the ADB website in accordance with ADB’s Safeguard Policy Statement. including a school. of which 811 were private and the remaining 64 were government land.
. business premises reestablishment allowance and a business loss allowance. BMRC is meeting the cost of restoring the affected portions of public property. and appropriate compensation packages. conduct environmental. cash assistance for rehabilitation. A detailed break up of land requirement for each corridor is available. Additionally. BMRC has developed a rehabilitation package dealing with assistance to affected local people with eligibility and entitlements for various losses being. The total land requirement for the project was 124 hectares (ha). and compensation packages and processes. BMRC has allotted and registered new houses for the slum dwellers in the name of women of the household which is in compliance with international best practices. park and religious structure. In addition. inconvenience allowance. in principle. Noncompliance and defaults will be followed up with necessary action.838. Of this. BMRC has mainstreamed environmental mitigation into its contractual agreements such that all contractors involved in construction of the metro will be obliged to implement the environmental management plan and ambient monitoring programs. designed for the benefit of persons who suffered loss of land. properties and income and livelihoods. 34.3 km connecting the north–south and east–west ends of Bangalore city. Land acquisition for the project was initiated in 2006 and has been completed in accordance with the Karnataka Industrial Area Development Board Act. BMRC adopted a transparent approach for the acquisition of land and properties. rental income loss allowance. Other mitigation measures on transportation of soil have been factored into the IEE. The rehabilitation packages were developed and have been implemented and cash compensation has been paid to the affected households by BMRC. Public consultation has been carried out by BMRC and suggestions and comments from the community have been incorporated in the project design and execution. The cash assistance included a shifting allowance.
The project is being implemented by BMRC.9
36. railways. initially categorized A for involuntary resettlement based on preliminary publicly available information. and the DMRC). BMRC has already taken all necessary advance action steps. The social due diligence report assessed the impacts on indigenous peoples. The company has been operating as an independent entity for several years and will agree in the ADB loan agreement to comply with sound corporate governance requirements. The project is categorized C for indigenous peoples. The chair of BMRC is the secretary of urban development of the national government. The operations manual. This established that land acquisition and resettlement and rehabilitation processes have been completed (in compliance with ADB’s Safeguard Policy Statement) and affected persons have all received compensation (excluding the eight cases noted in para. Construction Arrangements
40. (ii) “reach” 1 8 is nearing completion and proposed for opening by early 2011. BMRC will be the project operator responsible for recruiting operation and maintenance staff. in which four international consortia were short listed prior to obtaining competitive price quotations. 2. The project. 37. 9
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3. Similar cases have in the past been resolved quickly and amicably and generally in BMRC’s favor. and staff training will be provided by the general consultants. There are five board members from the state government. Management
39. since BMRC has remained committed to providing strong compensation and rehabilitation packages. (iii) 80% of the contracts have been awarded.
. including the managing director and principal secretary finance.5 km with six stations extends from Cricket Stadium to Byappanahalli station. including depositing compensation amounts with the court which will determine the grievance claims. The procurement followed a global tender. BMRC will also carry out the project operations and management once the metro is functioning. However. with the first train having rolled out in the Republic of Korea in September 2010. which includes five from the national government (urban development. D. procedures. 36). Reach 1 of 6. 38.
41. The tender also had a technology transfer element to an Indian domestic company. BMRC has made good progress and the project is in an advanced stage of construction as reflected by the following milestones: (i) land acquisition is completed. has been recategorized as category C following ADB’s detailed safeguards assessment and detailed due diligence. Due diligence also identified eight pending cases of litigation related to compensation and resettlement. and the balance are under bid. and three functional directors who are experts in railway development and operations or transport engineering. BMRC's board comprises 13 directors. (vi) train manufacture has commenced. safety manual and requirements. the special-purpose company established by the national and state governments for the project in 1994. there are no indigenous peoples affected by the project. This is in line with the practice followed by the DMRC for
The project is divided into four “reaches” and underground portions. Implementation Arrangements 1.
ADB will require BMRC to institute. and budget. and Evaluation
43. A. B. as amended to date) and policy relating to the Combating of Money Laundering and the Financing of Terrorism (2003). and annual business plans which include projected financial statements. construction. The proposed ADB loan is of up to $250 million to BMRC. BMRC will submit the annual indebtedness plan for ADB’s approval. Reporting. BMRC has proposed that noncritical functions should be outsourced through suitable contracts. as well as the financial statements. 5.2 trillion
. semiannual unaudited financial statements. business plan. BMRC was advised of ADB’s Anticorruption Policy (1998. Instrument and Amount THE PROPOSED ADB ASSISTANCE
44. and covenant with ADB to refrain from engaging in such activities. audited financial statements. BMRC will provide. The capital investment for financing urban infrastructure in India is estimated at $1. among other things. Project Performance Monitoring. accountability. and maintain the project. operate. and transparency. Disbursements of ADB’s loan will be conditional upon receipt by ADB of reports from the lenders’ technical consultant satisfactory to ADB. 45. contributions from municipal government finances. Construction and procurement progress and initial operations will be reviewed by the lenders’ technical consultant and assessed against the project’s schedule. The loan documentation between ADB and the BMRC will further allow ADB to investigate any violation or potential violation of these undertakings. The loan will be provided from ADB’s ordinary capital resources without government guarantee. IV. a special-purpose company established to develop. and initial operation.10
Delhi. BMRC also will provide an annual review of compliance with environmental and social safeguards pursuant to ADB's Safeguard Policy Statement. Justification for ADB Assistance ADB’s support for the project is justified based on the following: (i) Urban infrastructure development is often financed mainly by grants from the government. specifications. The Assistance 1. or by multilateral finance institutions backed by sovereign government guarantees. BMRC will report to ADB on the progress of the project procurement. and indebtedness plan. a capital expenditure plan. and confirmation of compliance with financial covenants for the next financial year. and BMRC is obliged to comply with the annual indebtedness plan for the next financial year. Anticorruption Policy
42. 4. Indian Railways has a large pool of trained traffic controllers and these may also be seconded to BMRC for train operations. Consistent with its commitment to good governance. and comply with internal procedures and controls following international best practice standards for the purpose of preventing corruption or money laundering activities or the financing of terrorism. maintain.
Compliance with ADB’s environmental and social safeguards will ensure proper resolution of social issues and mitigation of adverse environmental impacts. institutional accountability.000 to the Bangalore Metro Rail Corporation for the Bangalore Metro Rail Transit System Project from ADB’s ordinary capital resources. planned urban development. 1966. Manila. The creation of a dedicated institutional vehicle for managing life cycle costs of public infrastructure with due accountability. ADB’s participation.com/mgi/reports/freepass_pdfs/india_urbanization/MGI_india_urbanization_fullreport. 11 the Government of India will be requested to confirm that it has no objection to the proposed assistance to BMRC. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Asian Development Bank and recommend that the Board approve the loan of up to $250. including exploring new sources. ADB will enter into suitable finance documentation. To effect this shift in financing. India's Urban Awakening: Building Inclusiveness. good corporate governance. Similar structuring for other projects with viability gap funding can effectively replicate this model. RECOMMENDATION
47. 2010. Consistent with the Agreement Establishing the Asian Development Bank (the Charter). ADB’s participation. in form and substance satisfactory to ADB.
Haruhiko Kuroda President 9 March 2011
Mckinsey and Company. and leveraging government grant funds or viability gap funding support will help to catalyze additional finance for the project. will help promote strong governance. Agreement Establishing the Asian Development Bank. Few financial institutions have the ability to structure appropriate financial models and the appetite to lend long-term funds to capital-intensive public service projects. if any. and due diligence will help mobilize long-term debt funding and catalyze domestic financial institutions such as banks and insurance funds to consider long-term loans for this project.
C. To meet such volumes of investment. robust institutional accountability. Sustaining Economic Growth.mckinsey.2 trillion 10 if operating expenditures are included. http://www.
46. V. good governance.pdf. following approval of the proposed assistance by the ADB Board of Directors. and overall efficiency in operations. and effective leveraging of government grants are a prerequisite.
TP PT TP PT
. the efficient application of these funds. and compliance with ADB’s requirements. and efficient management of assets created so as to minimize operating costs (or overall life cycle costs) to ensure sustainability. a paradigm shift is required in sourcing financing. 11 ADB.000.11
from 2011 to 2030 and $2. capital structuring.
Improved urban infrastructure supports economic growth in urban centers through better connectivity and access Share of urban Bangalore GDP increases from 33% in 2008 to 38% in 2020 Emergence of similar mass public transit systems in at least three of India's large cities with a population of over 2 million by 2015 At least three public transport systems have private sector.12
DESIGN AND MONITORING FRAMEWORK
Design Summary Impact 1. well utilized. foreign direct investment.5% by 2020 from 34 mg/m3 of nitrous oxide and 4 mg/m3 of carbon monoxide in 2006
MOUD reports on urban transport and on BMRC Monitoring and progress reports by BMRC Independent audits by environmental agencies
Outputs 1. nitrous oxide. and hydrocarbons by at least 2. Well functioning institutional and operational arrangements for managing the MRT system 3.0 km underground portion and interconnection between corridors at Majestic and depot at Peenya is in operation by October 2013. Financially bankable structure is developed and implemented East–West Corridor: 18. Crowding-in of private sector investment and commercial non-recourse finance into large urban transport projects Outcome An efficient.8 km underground portion and depot at Byappanahalli is in operation by October 2013. North–South Corridor: 24. State government and BMRC progress reports and online posting of construction progress BMRC minutes on meetings and formally approved institutional arrangement reports Audited financial statements of BMRC ADB review mission reports
. Average reduction in passenger travel times at peak hours by at least 15 minutes for an average journey of 8 km by 2015 Reduction of vehicular emissions of carbon monoxide. and financially sustainable urban rail transport system is developed for Bangalore city.2 km including 4. environmentally friendly.
Share of public transportation in Bangalore increases from 46% in 2009 by at least 5% by 2019 and another 5% by 2023. and commercial financial support by 2018 Publication of macroeconomic indicators by the Government of India and the Government of Karnataka Assessment reports on urban transport in the country from MOUD Performance Targets and Indicators Data Sources and Reporting Mechanisms
2. Infrastructure for phase 1 is completed 2.1 km including 4.
JICA = Japan International Cooperation Agency. During operations. MOUD = Ministry of Urban Development.
. the project employs 1. GDP = gross domestic product. Source: Asian Development Bank.Appendix 1
Performance Targets and Indicators Inclusion of commercial and other financing into project structure for financial closure by 2013 ADB's social and environmental safeguards are complied with in full. km = kilometer. BMRC = Bangalore Metro Rail Corporation.640 key operations and 70 management staff for managing the MRT system in place by 2013
Data Sources and Reporting Mechanisms
ADB = Asian Development Bank. MRT = mass rail transit.
spurring commercial finance into the sector. aiding in improving traffic accident rates. and social safeguards focus. The prime impact of the project is on developing effective mass connectivity solutions for urban centers and thus aiding overall economic growth. linked to land use planning and efficient spatial development. through the development of a citywide transport grid. Consistent with ADB's urban sector. the project supports self-sustainability of urban sector projects. financial sustainability. (iii) environmental improvement by providing a more energy efficient mass urban transport system (energy requirements estimated to be a fraction of the comparable road-based systems) as well as through reducing fuel consumption and pollution impacts from private vehicles. In addition.
P P P P
B. and travel delays. (iv) the demonstration of sustainable financial and operations management through a dedicated urban transport company. The project benefits the urban poor and middle class by providing a cheaper.
. (ii) effective urban transportation for economic growth.5 million population by 2012. and private sector operations. (ii) reduced time delays in travel due to a dedicated travel corridor. accidents. crucially. Link to the National Poverty Reduction Strategy and Country Partnership Strategy Consistent with the country partnership strategy (CPS) for India's 3-year assistance program (2009–2012)a and specifically with the CPS emphasis on environmental improvement and Climate Change Implementation Plan (2009– 2011) and recommended financing of "MRT [mass rapid transit] projects in medium sized Indian cities.
POVERTY ANALYSIS AND STRATEGY
A. Overall. private sector development. and (iii) the development of a bankable project structure as a model for catalyzing private sector funding. the Metro Rail Transit System Project has an indirect impact on poverty reduction through both cost and time savings which can be factored in at various levels." the project has a positive impact on economic growth for poverty reduction. These are crucial for providing costeffective connectivity. and (vi) demonstration of the use of property realizations to provide an innovative revenue source for financing infrastructure. which will catalyze private sector participation and attract financing from commercial financiers into other such projects in India. especially in middle-sized Indian cities currently suffering from public transport gaps and exponential private vehicular growth leading to growth in pollution. By providing a sustainable public urban transport modality in Bangalore city.14
SUMMARY POVERTY REDUCTION AND SOCIAL STRATEGY
Country/Project Title : India: Bangalore Metro Rail Transit System Project South Asia Department/ Public Management. as well as other thematic priority areas noted in the CPS such as environmental sustainability. and more efficient public transport system. successful project implementation will catalyze similar projects in other local municipal governments.b The project supports ADB's private sector development strategy by establishing a bankable financial model for a large infrastructure project without sovereign guarantee. safer. time saving for commuters. (ii) institutional development. The project strongly supports the CPS for India by supporting the transport sector (a priority area). all of which are regarded as central goals of Strategy 2020 of the Asian Development Bank (ADB). The project aims at (i) environmental improvement through clean transport. and (iii) improved health costs over a longer period due to anticipated lower vehicular emissions in the city. the project covers a large catchment area of the city providing accessibility to both low. considered to be a key factor in urban pollution growth in recent years. The project's key outcomes will be the implementation of a metro rail system in the city and the limited recourse finance model. (ii) traffic decongestion and faster travel times versus the status quo of growing private vehicle traffic. leading to better public transport development in Indian cities and. thus effecting a better use of limited government funds. ADB support provides crucial credibility for the project.
Targeting Classification: General intervention
1. and (iii) project financing structures. increased productivity and hence economic growth. providing an alternative to private vehicles. which is in line with ADB’s urban transport strategy for local governments to self-finance and sustain urban development projects without dependence on central government finances.and middle-income workers to attractive labor markets in the developing industrial and commercial parts of the city. (v) demonstration of “bankability” structuring through the limited recourse financing model and credit enhancement mechanisms able to catalyze further commercial financing. which has several pioneering aspects: (i) new public transport modality. Benefits include (i) the provision of sustainable public transport for the city's 8. Financial Sector and Trade Division Private Sector Operations Department/ Infrastructure Finance Division 1
Direct Loan (Nonsovereign public sector loan)
I. including (i) reduced average travel costs per km versus private vehicular transport. Key issues. The project supports implementation of metro rail-based public transport systems.
describe key features and resources provided to implement the plan (including budget. and traditional activities have been considered as a fully integrated part of the preparation process to avoid discrimination and/or disruption of activities. No direct impact on poverty is envisaged as a result of the implementation of this project. If no. Different techniques of consultation with stakeholders were used during project preparation—public opinion.Appendix 2
2. An interactive meeting was held with members of the public.
Consultation and Participation
Consultations were carried out with all the stakeholders during the preparation of the project.92 million in 1981 and 4. and concerned environmental groups at Bangalore University Senate Hall. and 10.177 high schools. 29% of the people sampled in the east–west corridor and almost 45% in the north–south corridor are graduates. It is further projected that the population size of the Bangalore urban agglomeration will be around 7.0 million in 2021. The geographical boundaries of the city are also expanding rapidly. group discussions.710 persons per km2 in 2001.25% of the people sampled in the east–west corridor are illiterate. questionnaires were designed and information was collected from the 788 households. local customs.260 persons per km2 in 1991. in the north–south corridor there were no illiterate people in the sample. Local communities and affected people were consulted throughout the preparation process to minimize impacts. a consensus emerged from the meeting that the metro rail project implementation would result in a better mode of transport with a wide range of benefits to the community.
. comfortable and safe means of transport. As an integral part of land acquisition. media. 1. A. There are 77 hospitals. The process will continue during the implementation of the project. 6. affected communities and affected people were directly and fully involved in the project. including the vital transportation sector. In terms of educational background. Additionally. and these showed people’s support for the project and the smooth process of land acquisition. Consultation will be continued during project implementation. ensure social acceptance. as against the city’s earlier population of 2. 24 engineering colleges. public opinion makers were asked whether a metro rail system would be a viable alternative to the existing modes of transport. the project will have indirect impacts on Bangalore.8 million in 2011 and 11. C&P was considered as a part of the more extensive resettlement planning exercise. All stakeholders were informed and the stream of information will continue during the implementation of the project. 209 pre-university schools. which showed the city area as 386 square kilometers (km2) in 1981. Consultations were held to ensure participation and minimization of the negative impacts. A city of this size with a rapidly rising population of the above magnitude demands a whole range of civic services. Onequarter of the people sampled in the east–west corridor and 41% in the north–south corridor are from lower economic backgrounds.305. the city’s population density was 7.772 primary schools. and increase equitability. 446 km2 in 1991. Given the chaotic urban road traffic. and the growth rate is currently around 3. Findings of Social Analysis A social impact assessment was conducted as part of the preparation of environmental impact assessment reports. 83. 2. 91% of the sample felt that it could be a viable. etc. What level of consultation and participation (C&P) is envisaged during the project implementation and monitoring? Information sharing Consultation Collaborative decision making Empowerment 3. The per capita income at current prices in urban areas only is Rs28. 9.and lower-income groups are the biggest. public meetings. and India as a whole. Finally. The executing and implementing agency (Bangalore Metro Rail Corporation [BMRC]) will ensure that essential participation process will be continued throughout the project implementation. Was a C&P plan prepared? Yes No If a C&P plan was prepared.91% of the people are literate. Bangalore city has a population of 5. and the middle.983 persons per km2 in 1981. explain why. religious practices. and interactive sessions. With increasing population and reduced available land area. and 4 universities. II. consultations were held during the due diligence study after the land acquisition period. as evident from the census data. consultant input. Views and concerns of all stakeholders will be taken into consideration and addressed whenever feasible. 2. when the salient features of the metro rail project for Bangalore along with its projected benefits to the community and environmental and socioeconomic impacts were explained by the project proponents. On the basis of deliberations. and thus should be welcomed.13 million in 1991. The higher-income group is the smallest group. To understand the socioeconomic profile of the affected persons. Design features. Nonetheless. This shows that the population has nearly doubled in the last 20 years.8% annually. and 531 km2 in 2001. 31 dispensaries. quick. Karnataka.).70 million according to the census statistics for 2001.
P P P P P P P P P P P P
SOCIAL ANALYSIS AND STRATEGY
B. etc. This was followed by intense discussions and a question and answer session. 75% of the people sampled in both the east–west and north–south corridors are business people.
C. etc. assets. Their mobility will be improved in terms of access to social services. Key issues. Key actions. and better health facilities. social framework and due diligence was carried out to indigenous peoples gauge the compliance of the land planning framework acquisition and resettlement process Environmental and as per the national and state laws social management with that of ADB’s policy. resources. a and indigenous rehabilitation package was peoples plan developed by BMRC to be provided Combined to the affected people in addition to resettlement the compensation. The executing agency will ensure that affected women are consulted and invited to participate in group-based activities to enable them to gain access to and control over resources. Measures included in the design to promote gender equality and women’s empowerment—access to and use of relevant services. It is evident that availability of a better metro rail system and safe connectivity with better transport services will benefit the women of the area. or opportunities and participation in decision-making process: Gender plan Other actions/measures No action/measure III. efforts will be made by the project authority for women to receive preferential treatment for employment in the civil works. The land was framework already in the possession of BMRC and the land was acquired as per Combined the Karnataka Industrial Area resettlement plan Development Board. Gender impacts of transport projects are generally favorable. No particular issue is expected to arise from the implementation of the project. Therefore. Additionally. higher levels of schooling. during the project implementation. The project will have a positive impact on women. Gender and Development 1. system arrangement None Indigenous peoples
No impact Indigenous peoples plan Indigenous peoples planning framework Combined indigenous peoples plan and resettlement plan Combined resettlement framework and indigenous peoples planning framework Indigenous peoples plan elements integrated in project design with a summary Environmental and social management
. with proper health safeguards. SOCIAL SAFEGUARD ISSUES AND OTHER SOCIAL RISKS Significant/Limited/ Strategy to Address Issue Plan or Other No Impact Measures Included in Design No impact Land acquisition had already been Resettlement plan completed before the intervention of Resettlement ADB’s finance. 2.
system arrangement Environmental and social impact matrix None Labor Employment opportunities Labor retrenchment Core labor standards Affordability Other risks and/or vulnerabilities HIV/AIDS Human trafficking Others(conflict. Strategy 2020: The Long-Term Strategic Framework of the Asian Development Bank. Country Partnership Strategy: India. CPS = country partnership strategy. b ADB. 2009. IV. However. There is no other risk foreseen. please specify Job opportunities will open for skilled and unskilled labor during project implementation. Manila. a ADB. 2008–2020. political instability. 2009–2012.).
P P P P
. BMRC = Bangalore Metro Rail Corporation. safety. Manila. Source: Asian Development Bank. the implementing agency through its civil contractor will ensure appropriate health. Plan Other action No action
Action No action Plan Other action No action
Are social indicators included in the design and monitoring framework to facilitate monitoring of social development activities and/or social impacts during project implementation? Yes □ No ADB = Asian Development Bank. MRT = mass rail transit. and sensitive issues during the implementation of the project. etc. No particular issue is expected. 2008. MONITORING AND EVALUATION Specific assurances will be added for the Borrower to require its contractors to comply with the core labor standards on the work camps/sites.