Putting Delhi on Track: But the fate of the metro depends on the numbers that take to it

The introduction of metro rail systems transformed the urban transportation landscape and marked a paradigm shift in the way people commuted. Delhi Metro set the pace for this change with its efficient network, state-of-the-art infrastructure, and commitment to innovation. This story from our archives talked about the strides taken by Delhi Metro, its financial viability and completion targets…

Twenty years after the debut of the metro rail in Kolkata, Delhi’s mass rapid rail system is ready to roll. On December 24, 2002, Prime Minister Atal Bihari Vajpayee inaugurated the Metro rail, which made a 10-minute run from Kashmere Gate to Seelampur on the Shahdara-Tis Hazari corridor. With it the Rs 81.5 billion, Phase-I project of Delhi Metro Rail Corporation (DMRC), which is executing the projects for the Delhi Metro Rail Transit System (DMRTS), has been opened to the public.

The first phase comprises of 62.5 km rail tracks where the inaugural line covers an 8.3 km long corridor between Shahdara in east Delhi and Tis Hazari in north Delhi. Initially, the trains on this line will be operated at eight-minute intervals, which will gradually be reduced to five minutes and then three depending on the traffic build-up. The system is capable of running trains at two-minute intervals. The route has six stations – Shahdara, Welcome Colony, Seelampur, Shastri Park, Kashmere Gate and Tis-Hazari.

The project – when complete by 2010 – would meet international standards. Right from the ticket barriers (where automatic sensors will read the tickets) and contactless smart cards (which will be read directly from the passenger’s pocket or handbag) to the 240 state-of-the-art coaches that have been imported from Korea at Rs 50 million each, with a capacity to carry up to 390 passengers, Delhi Metro will give a taste of international travel. “It will have world-class infrastructure and would have been executed with least inconvenience to Delhi’s residents,” says a senior officer of Japan Bank for International Cooperation (JBIC), which is the main financier of the project.

Project finance

JBIC is contributing 56 per cent of the Rs 82.5 billion Phase-I project cost, while the Delhi government and the Government of India (joint venture partners for the project) are each funding 15 per cent of the cost at concessional rates. The remaining amount is coming from interest-free subordinate debt from the government’s land acquisitions (8 per cent) and property development by DMRC (6 per cent).

In 1997, JBIC contributed an Official Development Assistance loan of 14.76 billion yen in 2001, and a third tranche of 28.66 billion yen in 2002. The amount for the fourth tranche is under consideration of the Japanese government. The total loan sanctioned so far works out to Rs 20.9 billion.

At present, JBIC is considering the funding pattern for the second phase of the project, which is expected to cost another Rs 80 billion.

The entire 62.5 km of the first phase of the project is set to finish in four stages by March 2005, while the total project including both phases and consisting of 10.5 km will be ready by 2010. The first phase will cover three main corridors in the most congested areas of central and east Delhi – the 17.9 km Shahdara to Barwala section (Line 1), the 11 km Delhi University to Central Secretariat section (Line 2), and a new 20.7 km link proposed between Connaught Place and Dwarka (Line 3) in southwest Delhi. However, says Anuj Dayal, chief spokesperson of DMRC, “the master plan is under revision as we expect some problems during the construction period of the metro project such as land acquisition, unauthorised encroachment and hard rocks”.

Initially, DMRC was assigned supervision of the project’s civil works. However, due to a delay initially in the completion of the first section, a consortium of consultants – Pacific Consultants International (PCI), Tonichi Engineering Consultants, JARTS (all of Japan), Parsons Brinkerhoff International of the US and Rites of India – has subsequently been involved.

Financial viability

On completion, DMRC estimates that as many as 2.2 million commuters will use the metro daily. The expected savings, according to DMRC officials, will be close to Rs 4 million a day. The savings are being attributed to less wear and tear of roads, less usage of petrol and diesel, and reduced need to build new roads.

Also, the metro is expected to change Delhi’s entire commuting scenario. For instance, it is estimated that the Shahdara – Tis Hazari corridor will be used by over 100,000 passengers a day.

The fare has been pegged at around 20 per cent higher than bus fares, but lower than those of chartered buses. The initial fare which is part of the promotional package, has been kept between Rs 4 and Rs 7, which will be reviewed in three months.

Meanwhile, questions are being raised about the project’s basic viability and whether it can generate enough revenue to pay for the operating and maintenance costs, and depreciation costs, apart from repaying the loans.

DMRC officials are, however, not worried. They maintain that they can cover the operating and maintenance costs and get an internal rate of return of around 2.3 per cent from the first day of operations. The confidence stems from the fact that they have been able to raise cheap loans (the Japanese loan, for instance, comes at an interest rate of only 1.8 per cent, payable in 30 years with a 10-year moratorium).

This means there will be no outgoing for the first 10 years. DMRC has calculated that 90 per cent of the revenue will come from tickets and the remaining from the sale of advertising space at the stations as well as property development. The corporation pegs revenue generation from December to be approximately Rs 1.2 million from commuters alone.

But, so far, there is no consensus on how many passengers will use the metro. The viability of the project hinges totally on this. To this end, DMRC had hired the National Council for Advanced Economic Research (NCAER) to work out a tariff plan. The NCAER has concluded that only 1.6 million to 1.7 million passengers will use the metro daily (DMRC puts this figure to 2.2 million) and has fixed a tariff slab that starts at Rs 4 for the first two km and goes up to Rs 10 at 2001 prices. At these rates, the NCAER reckons, the project will be able to cover its operations and maintenance costs as well as its depreciation costs.

What is worrying the corporation, though, is the low traffic projection by the NCAER, which carried out on the Shahdara- Tis Hazari corridor. DMRC argues that NCAER has taken into account only the Shahdara-Tis Hazari stretch, which has a lower socio-economic profile, while more lucrative stretches like Connaught Place to Dwarka, are yet to be commissioned.

However, the NCAER official points out: “The metro travellers in this corridor will be the ones who use the chartered bus or a two-wheeler. And, the Shahadara-Tis Hazari route might be a drain as the lower middle class might find the metro expensive.

Future plans

Meanwhile, DMRC is venturing into consultancy and project preparation work for metro systems coming up in other cities. It recently begged the mandate for preparing the project schemes for the two proposed metro lines in Bangalore. Also, the corporation, along with Rites, is in negotiation for preparing a project report on a predominantly underground corridor from Colaba to Kurla in Mumbai.

One way or another, there’s a lot hanging on the Delhi metro. Having launched the metro rail, DMRC has been busy striking deals with companies that want to set up shop at the stations. A contract has already been signed with McDonald’s and negotiations are on with Nirula’s to open fast food counters. It is also in talks with the state-owned Delhi Transport Corporation, which will deploy 200 shuttle buses to carry rail passengers from the metro stations to other points in the city.

Meanwhile, DMRC is pushing for the second phase of the project, which will cover another 42.1 km, connecting areas like Noida and Vasant Kunj to the centre of the city. The government has already given its approval for the second phase.

In other words, the grey-green DMRC hoarding and the security personnel employed by the corporation to direct traffic are likely to be a very visible part of the city’s landscape.

Shampa Bahadur