Mumbai Metro ProjectOn PPP Model

ByKetan Bhingarde

Kushinjai VasalyaNavrattan Roshan

Kritika TiwariTarun Anand

Mumbai Metro Rail Project:• Implementing agency: MMRDA• Master Plan prepared by DMRC with the help of

IIT Mumbai & TCS• The main objective is to provide a mass transit

connectivity to people within an approach distance of 1 to 2K.m. & to serve the areas not connected by existing Suburban Rail System

• Total corridors indentified in Greater Mumbai: 9 to be implemented in three phases, total length 146.5 km

PPP Structure of the Project • A concession agreement on BOOT basis for a period

of 35 years• Under the concession agreement, the operator has to

design, finance, construct, operate, own and maintain the first corridor and transfer the ownership and assets at the end of the concession period.

• A Special Purpose Vehicle (SPV) named Mumbai Metro One Private Limited (MMOPL) has been formed with Reliance Energy Limited, Veolia Transport and MMRDA holding equity stakes of 69%, 5% and 26%, respectively.

Financing Information• The total project cost is estimated at 2,356

crores.• The project shall be financed on the basis of a

Viability Gap fund of 650 crores contributed by the Government of India (470 crores being 20% of the project cost) and Government of Maharashtra (180 crores being 7.5% of the project cost).

• The remainder is to be financed by 70% debt, 30% equity.

Financing Details:

• Component Crore• Viability Grant Funding 650• Debt 1240• Equity 466• Total 2356

Process Analysis

Conceptualization and Feasibility• The Government had been exploring the

viability of various mass transit systems that are efficient, economically viable and environment friendly

• In this context, a detailed feasibility study was carried out under the Indo-German Technical Co-operation by entrusting the consultancy work to TEWET in association with DE-Consult & TCS, during 1997-2000.

• The study recommended a mass transit corridor from Andheri to Ghatkopar as potentially bankable and economically viable, after examining a number of alternative corridors and alignments.

• To manage the transaction process, a consortium consisting of Louis Berger as technical consultants, Price Waterhouse Coopers (PWC), Masons and Economic Law Practices was appointed in 2003-04 to assist MMRDA.

Process followed• GoI accorded approval to initiate Pre Qualification process

subject to the condition that model documents finalized by GoI / Planning Commission will be followed.

• ThePre Qualification process started based on RFQ document of GoI.

• Concession Agreement finalized based on Bid Documents of Hyderabad Metro and drafts of Planning Commission.

• The documents submitted to Department of Economic Affairs (DEA) on 19th June 2008.

• Clearance was given by DEA in October 2008 after several meetings.

• The bid documents were issued to the bidders in October 2008

List of Technically qualified bidders

• Hindustan Construction Company and RITES

• Reliance Energy Limited and Connex-France

• Shaktikumar Sacheti Limited and Lingkaran Metro

• Siemens, L&T, Gammon, BEML

• IL&FS and ITD Thailand and Unity Infraprojects

List of Financially qualified bidders

• Reliance Energy Limited and Connex-France

• Siemens, L&T, Gammon, BEML

• IL&FS and ITD Thailand and Unity Infraprojects

Award of Contract

• After the bid process, negotiations commenced with the lowest financial bidder, i.e. Reliance Energy and Connex France. Veolia Transport and Hong Kong MRT

• The contract for construction of Mumbai Metro is finally award to Reliance Energy and Connex France after the negotiations

DevelopmentThe development phase of the project was initiated in

parallel to the VGF approval process. Major milestones achieved in the development phase are presented below:

• The SPV was incorporated in December 2006.

• The Engineering and Project Management Consultants, a consortium of Parsons Brinkerhoff (USA) and Systra SA (France) joined the team on February 14, 2007

• Signing of the Concession Agreement and Shareholders agreement took place on March 7, 2007

• MMOPL and Government of Maharashtra entered the State Support Agreement on April 20, 2007

• Construction commenced on February 8, 2008

• Financial Closure for the project completed on October 3, 2008

Risk allocation framework• Pre-Operative Risks

RISK TYPE SENSITIVITY RISK PERIOD RISK BEARER

Delays in land acquisition

High 0 – 5 Years Government

Financing Risk Medium 0 – 5 Years Private Sector

Planning Medium 0 – 5 Years Private Sector

Regulatory,administrative &approval delays

Low 0 – 5 Years Private Sector

Construction Phase RisksRISK TYPE SENSITIVITY RISK PERIOD RISK BEARER

Design risk Medium 0 – 5 Years Private Sector

Construction Risk Medium 0 – 5 Years Private Sector

Change in scope risk

low 0 – 5 Years Government

Finance risk Medium 0 – 5 Years Private Sector

Operational Phase RiskRISK TYPE SENSITIVITY RISK PERIOD RISK BEARER

Technology Risk Low 0 – 35 Years Private Sector

Operations &Maintenance Risk

Medium 0 –3 5 Years Private Sector

Market Risk High 0 – 30 Years Private Sector

Performance Risk High 0 – 30 Years Private Sector

Handover RisksRISK TYPE SENSITIVITY RISK PERIOD RISK BEARER

Handover Risk Low 35 Years Private Sector

Private OperatorEvent of Default

Low 0 – 35 Years Private Sector

MMRDA Event ofDefault

Low 0 – 35 Years Government

Other RisksRISK TYPE SENSITIVITY RISK PERIOD RISK BEARER

Interface Risk(with other metrocorridors)

Medium Throughout Private Sector

Force Majeure Low Throughout Shared(Dependingon the typeof event)

Change in LawRisk

Low Throughout Private Sector

Current Status• The construction has commenced from February, 2008

and the project achieved financial closure in October 2008.

• The completion date for the project construction is expected by mid 2011.

• At present, the construction of the viaduct is underway with 773 piles being dug up.

• The construction of the Depot, Substation and Stations has also commenced along the route of the project.

• Work has also commenced on the construction of 2 overhead bridges at Andheri Station and the Western Express Highway.

THANK YOU……….