4. Mumbai Transport Infrastructure: Overview
• 13.0 Million People Travel Daily By Public Transport
• Train Transportation – Lifeline Of Mumbai
Private Vehicle
12.8%
Intermediate Public Transport
9.2%
Public Transport
78.0%
78%
Suburban Rail 56%
BEST – 22%
5. 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 passenger travel per train against the carrying capacity of 1750
resulting in unbearable overcrowding.
• Strong mismatch in demand and supply
6. Mumbai Transport Infrastructure: Loopholes
• Bus Network
• Number of cars in Mumbai has grown by 51% in the last six years; resulting in
road congestion & environmental pollution
• Constraints to expand the existing road capacity to meet the future demand
• Not serving the purpose of the feeder service to rail network
7. Serve Areas Not Served By Current
System
Higher Capacity
Faster Travel
Attractive To Commuters
Environment Friendly
Improve Overall Mobility
Access To Important Industrial And
Commercial Area
Time Reduced To 21 Min From 71 Min
Between Versova & Ghatkopar (Ph-1)
Provide A Rail Based Connectivity Within
An Approach Distance Of 1 To 2 Km; Fare
East-west Rail Based Connectivity To Central
And Western Suburbs
Additional 7 mn Commuters
Reduction In Air And Noise Pollution
Mumbai Metro Project: Gap Analysis
8. 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)
9.
10. Project Plan Phase I Line 1 – Versova – Andheri - Ghatkopar
• India’s first PPP metro project, based on the build, own, operate and
transfer (BOOT) model
• Elevated 11 km line to Ghatkopar via Marol, Chakala and Saki Naka
• AUGUST 2004 – approval received from the government of Maharashtra
and global bids were invited through expression of interest (EOI)
• SPV – Mumbai metro one private limited (MMOPL), a JV between reliance
infrastructure, Veolia transport and MMRDA
• Concession period of 35 years including the construction period of 5 years
• Estimated cost of the project – Rs 2356 crores
11. Project Plan Phase I Line 1 – Versova – Andheri - Ghatkopar
TIMELINE FOR THE PLANNED PROJECT
Govt. of Maharashtra approval 19th August, 2004
Invitation of Global Bids 21st August, 2004
Pre-bid meeting 23rd November2004
Technical bids 16th May,2005
Invitation of Financial Bids 15th September,2005
Receipt of financial bids 10th January, 2006
Evaluation of Financial bids January, 2006
Negotiations with the lowest
bidder
February-May, 2006
Negotiated offer 10th May,2006
LOI issued after GOM approval June 2006
Commencement of Construction Feb 2008
Reliance Infrastructure
Veolia Transport
MMRDA
EQUITY HOLDING (%)
26%
69
%
5
%
12. Financial Structuring Line 1 – Versova-Andheri-Ghatkopar
The 70% debt was provided bya
consortium of banks led by IDBI
The remaining Rs1706 crores was
financed by 70% Debt –Rs. 1193 Cr
and 30% Equity – Rs. 513 Cr
Out of the total estimated project
cost, cumulatively 27.5% was
contributed as VGF by the GOI and
Government of Maharashtra
Total Project
Cost
Rs 2356 Crores
Remaining
Rs 1706
Crores
70% Debt
Rs 1193
Crores
Consortium of banks IDBI,
Corporation Bank, Karur Vysya
Bank, Canara Bank, Oriental bank
of commerce and Indian Bank
30% Equity
Rs 513
Crores
Reliance Infra - 69% ~ Rs. 353 Cr.
Veolia Transport - 5% ~Rs. 26 Cr.
MMRDA - 26% ~ 134 Cr.
Viability Gap
Funding
Rs 650 Crores
VGF
GoI-20%
GoM-7.5%
Free Of Cost:
•Space For Car Depot At DN
Nagar Station And Ghatkopar
Station
•Land For The Project
13. Bidding – Metro Phase I Line 1
• Eligibility Criteria
• An Indian company or a company authorized to carry out business in India or
a JV with an Indian company
• Net worth of more than Rs.5,000 million or US$ 112 million
• Annual turnover for the last 3 years of more than Rs.3,650 million or US $
81.0 million
• Relevant experience in developing, constructing or operating a mass transit
system with minimum capacity of 20,000 PHPDT
14. Bidding – Metro Phase I Line 1
Evaluate Bids for Financial
Capability and Technical
Competence as per
evaluation criteria
Scrutinize System Design
Proposals For Conformity -
Technical And Performance
Specifications
Obtain bidders‟
confirmation to incorporate
proposed modifications if
any to provide level playing
ground
Those bidders scoring 75%
and above in technical
evaluation were eligible to
submit financial proposal
First Stage - Technical Proposals
15. Bidding – Metro Phase I Line 1
• Two Stage Process
• Second Stage-Financial Proposals
Technical Proposals Financial Proposals
Evaluation of Business Plan & other formats
submitted as per RFP documents
16. Bidding – Metro Phase I Line 1
Received Bids - 5 Technically Qualified - 3 FinancialProposals Received - 2 Preferred FinancialBid
"Mumbai Metro One consortium” LED
by Reliance Energy Limited and
Connex- France
"Mumbai Metro One
consortium” LED by Reliance
EnergyLimited and Connex-
France
Bidding Parameter - A bidder asking for minimum capital contribution to be selected as PreferredBidder
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 650Cr
Approvals - Negotiated offer was evaluated by the Bid Evaluation Committee appointed by the Metropolitan Commissioner
and approved by the state cabinet
“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
17. Bidding – Metro Phase I Line 2
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
Charkop - Bandra – Mankhurd Corridor
Project Winner
Reliance
Infrastructure
Only one that made a
financial bid
Bid Submitted
Rs 2,298 Cr
The Grant From The State
& Central Governments
Key Highlights of Project
Concessionperiod - 35 years with
an extension clause of another
10 years.
Financial closure :
Debt - Rs 6,931 Cr
Equity - Rs 2,332 Cr
Equity share : Reliance Infra - 74%
SNC Lavalin - 26%
Implementation under PPP format
Project cost:
MMRDA’s estimate : Rs 8,250 Cr
R-Infra’s estimate : Rs 11,000 Cr
VGF - Rs 1,532 Cr by GOI,
Rs 766 Cr by GoM
Construction work stalled due to
issues
18. Bidding – Metro Phase I Line 3
Initial Eligibility Criteria Modified Eligibility Criteria
Average annual turnover of
$175 million for five years generated
specifically from the execution of
underground railwayworks,
excluding hill tunnels
Average turnover of$175 million
for five years from billing for civil
infrastructure works completed
or inprogress
All member companiesof a
consortium or JV were required to
meet the minimum experience
criteria individually
The combinedexperience of a
consortium was required to meet
the minimum experience criteria
In technical qualification the end
date for experience limit of bidders
for 10 years wasDecember 2012
The end date for experience limit
ofbidders for 10 years ending
December 2012 was revised to
March 2013
Eligibility Criteria
19. Risk Management
Types of
Risk
Construction
Risk
Operational
Risk
Market/
Demand Risk
Financial
Risk
Political Risk
Time and Cost overruns or shortfall in performance parameter ofthe
project
Technical performance of the project during the operational phase can fall below
the levels projected
Possibility that the market conditions assumed in determining the viability of
the projects are not realized
Variation in Interest Rates and/or the risk of not being paid for services delivered by
the investors
Any disruption in construction or operation of an project due to political decisions
20. Risk Mitigation
Risk
Identific
ation
• Identifying the events or actions which effects the viability of the project
Severity
of Risk
• Incase the event occurs, the effect of the same on the cost/time of the project
Risk
Allocati
on
• Identifying and allocating the risk to the party who can manage it the best
Risk
Mitigation
• Steps/Actions which can be taken to reduce the chances of event occurring
Risk
Pricing
• Cost of addressing the risk needs to be determined and suitable provisioning
made
21. Risk Allocation Framework
• Pre-Operative Risks
Risk Type Sensitivity Primary Risk Bearer Comments
Delays in
Land
Acquisition
High Government
To be handed over to the concessionaire by
MMRDA. If unable to do so, MMRDA is liable
to extend project completion date, financial
closure date & concession period
Financing Risk Medium Private Sector
Has to achieve financial closure in 180 days
after signing the contract. Provision with
MMRDA to extend the period by another 180
incase not achieved
Planning Risk Medium Private Sector
Need to execute the project in conformance
with the specifications and standards
specified in the agreement
Regulatory,
Approval
Delays
Low Private Sector
Has to obtain all required clearances/permits
from the GoI/GoM for implementation of the
project
22. Risk Allocation Framework
• Construction Phase Risk
Risk Type Sensitivity Primary Risk Bearer Comments
Design Risk Medium Private Sector
Have to submit all drawings and schedule to
MMRDA for review. Also to be scrutinized by an
independent engineer
Construction Risk Medium Private Sector
Performance security of Rs.14 crore for due and
faithful performance of its obligations. Renewed
from time to time and replenished every 30
days. Penalty of Rs.2 crore/day for missing any
milestone
Change in
Scope Risk Low Government
Additional work outside scope would be
ordered by MMRDA performed by private
operator and subsequently reimbursed
Financing Risk Medium Private Sector
Only 85% of VGF to be released during
construction period of the project. Remainder of
funds after 6 months of project being
operational
23. Risk Allocation Framework
• Operational Phase Risks
Risk Type Sensitivity Primary Risk Bearer Comments
Technology Risk Low Government/Private Sector
Project to be executed in conformance with the
specifications and standards specified in the
agreement
O&M Risk Medium Private Sector
TO submit an operations and maintenance manual to
MMRDA for approval. Risk mitigation by allowing
concessionaire to appoint O&M contractors
Market Risk High Private Sector
The private operator would be allowed to levy and
collect the fares. The fares would be revised at a rate
of 11% every fourth year. No revenue guaranteefrom
the government
Performance Risk High Private Sector
Private operator has to hold at least 51% equity during
construction and in the 2 years after completion of 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 projectcompletion
24. Risk Allocation Framework
• Handover Risks
Risk Type Sensitivity Primary Risk Bearer Comments
Handover Risk Low Private Sector
Joint inspection by both parties 60 months prior to
the expiry of concession period to gauge
compliance with serviceability requirements
defined in the agreement, private party to pay
charges if found deficient
Private
Operator
Event of
Default
Low Private Sector
Only lenders are protected to equity holders bear
a major risk. MMRDA to take over the assets and
is liable to pay 90% of debt less insurance claims
25. 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
27. Pricing
250 240
200
Mumbai (elevated) Delhi (elevated) Delhi (Underground) Bangalore (elevated) Bangalore
(Underground)
chennai (elevated)
Cost Per Kilometre (Rs Crores)
350
400
325
28. 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 of
delays in clearance
From 2346 Crores to 4200 Crores
Source of Revenue Ticket sales,
Advertisements
5 – 10 % Ticket Sales
Advertisement, Station
naming rights
Fare Low as compared to other
modes of transport
Very high compared to
other metros in India
Pricing Authority Government in most of the
projects
MMOPL *
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
29. Learnings & Recommendations
• 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.
• Delay In Obtaining VGF Approval
• Substantial delay in obtaining VGF approval from the govt. Because model concession
agreement was not in place.
• 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.
30. Learnings & Recommendations
• 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.
• 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.
