Mumbai Metro

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

Mumbai Mumbai
Transport Metro : Project Financial
Infrastructure: Conceptua Planning Structuring
Overview lization

Key
Risk Learnings &
Bidding Project
Managem
Execution
ent Recommen
Process
dations
Mumbai Transport Infrastructure:
Overview
12.8 78.0
% %

9.2
%

Private Vehicle Intermediate Public transport Public transport

 13.0 million people travel daily

Suburban rail – 56% by Public Transport
78%
 Train transportation – Lifeline of
BEST – 22% 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% Reliance Infrastructure
Veolia Transport

Estimated cost of the project – Rs 2356 crores 5% 69%

MMRDA
FINANCIAL STRUCTURING
Line 1 – Versova-Andheri-Ghatkopar

Out of the total estimated project

Total project
cost, cumulatively 27.5% was
Cost
contributed as VGF by the GOI
Rs 2356
and Government of Maharashtra
Crores

The remaining Rs1706 crores was Remaining Viability Gap

financed by 70% Debt –Rs. 1193 Rs 1706 Funding
Cr and 30% Equity – Rs. 513 Cr Crores Rs 650 Crores

70% Debt 30% Equity VGF

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

Free of Cost: Consortium of banks

•Space for Car Depot
at DN Nagar Station
and Ghatkopar Station
• Land for the project
IDBI, Corporation Bank, Karur
Vysya Bank, Canara Bank,
Oriental bank of
commerce
and Indian Bank
Reliance Infra - 69% ~ Rs. 353 Cr.
Veolia Transport - 5% ~Rs. 26 Cr.
MMRDA - 26% ~ 134 Cr.
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

carry out business in India or a JV with an Indian
Company and Technical Competence as per
evaluation 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 Proposals
Received Bids - 5 Technically Qualified - 3 Preferred Financial Bid
Received - 2
"Mumbai Metro One "Mumbai Metro One
consortium” LED by Reliance consortium” LED by
Energy Limited and Reliance Energy Limited
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
Reliance Infrastructure-SNC
Lavalin, Canada-Reliance
Communication
GE India-L&T-CA-IDPL
Tata Power-Mitsubishi-Tata
Realty's Pioneer Infrastructure
GVK-Bombardier-YTL
Infrastructure Leasing &
Financial Services Limited -
Soma Constructions-Punj Lloyd
Essar-Alstom
Key Highlights of Project
„Concession period - 35 years
with an extension clause of
Project Winner another 10 years.
Financial closure :
Reliance Debt - Rs 6,931 Cr
Infrastructure Equity - Rs 2,332 Cr
Only one that made a Equity share : Reliance Infra - 74%
financial bid SNC Lavalin - 26%
Implementation under PPP format
Bid Submitted
Project cost:
MMRDA’s estimate : Rs 8,250
Rs 2,298 Cr Cr R-Infra’s estimate : Rs
The grant from the 11,000 Cr
state
& Central governments VGF - Rs 1,532 Cr by GOI,
Rs 766 Cr by GoM
Construction work stalled due to
issues
 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 2013
Average turnover of $175
million for five years from • Expected Submission of bids
billing for civil Oct 2013
infrastructure works
• Expected Evaluation of Pre-Qualification of
completed or in progress Bids
Nov 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
minimum experience Mar 2014
criteria
• Expected Issue of detailed tenders
July 2014
The end date for
experience limit of bidders • Expected award of contract to successful
for 10 years ending Oct 2014 bidder
December 2012 was
revised to March 2013 • Expected Commencement of construction
Jan 2015 Phase

 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 Technical performance of the project during the operational phase

Risk can fall below the levels projected

Market/ Possibility that the market conditions assumed in determining the

Demand Risk viability of the projects are not realized

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

Any disruption in construction or operation of an project due to political

Political Risk decisions
Risk Mitigation

• Identifying the events or actions which effects the viability of the project
Risk
Identific
ation

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

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

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

Risk
Mitigation

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

Risk made
Pricing
Risk Allocation Framework (1/2)
Pre-Operative Risks

Risk Type Sensitivity Primary Risk Bearer Comments

To be handed over to the concessionaire by MMRDA. If
Delays in Land unable to do so, MMRDA is liable to extend project
Acquisition High Government completion date, financial closure date & concession
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)
Operational Phase Risks
Risk Type Sensitivity Primary Risk Bearer Comments
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
Performance Risk High Private Sector the 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 serviceability
Handover Risk Low Private Sector 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 (Proposed)
35.00
₹ Delhi
30.00 Bangalore
₹ Chennai
25.00
₹
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 >
15.00 44
₹
10.00
₹ 5.00 Cost Per Kilometre (Rs Crores)
₹
0.00 400
350
325

250 240
200

Mumbai (elevated) Delhi (elevated) Delhi (Underground) Bangalore (elevated) Bangalore chennai (elevated)
(Underground)
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
4200 of delays in clearance Crores
Source of Revenue Ticket sales, 5 – 10 % Ticket Sales
Advertisements Advertisement,
Station
naming rights
Fare Low as compared to Very high
compared to other modes
of 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
The importance of Aarey

The Aarey Milk colony(also aarey colony) is a

neighbourhood situated in Goregaon(east) a suburb of
the city of Mumbai
It was established in 1949 to revolutionize the
processing and marketing of diary products in the city
16,000 cattle were reared on the land
The colony also gardens a nursery, lakes, an
observation, pavilion, picnic facilities and milk plants.
Aarey is famous among nature enthusiasts for being
the green lungs of the city
 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