Hyderabad Metro: Largest metro project under PPP offers a number of new features

When prime minister Narendra Modi flagged off the Hyderabad Metro a fortnight ago, it marked the launch of what has been billed as the world’s largest public-private partnership (PPP) project in the sector. Since it was thrown open to the public a day later, the 30-km stretch (24 stations) has witnessed good ridership, recording a high of 2.4 lakh passengers on a single day. In 2010, the erstwhile Andhra Pradesh government had signed a concession agreement with the Larsen & Toubro Metro Rail Hyderabad Ltd (LTMRHL), a special purpose vehicle, for the development of the project under a Design, Build, Finance, Operate and Transfer (DBFOT) basis. Estimated to cost Rs 14,132 crore in 2010, the project was scheduled for completion in June, 2016. However, logistical challenges and changing alignments led to delays, with the costs for the 72-km project being revised to over Rs 17,000 crore. The remaining stretch of Phase I (42 km) is likely to be completed by the end of next year. LTMRHL has fixed a minimum fare of Rs 10 for a distance of up to two km, while Rs 60 is the maximum fare for a distance of more than 26 km. The system would soon be hand-held by T-Savaari, a mobile app along with a smart card that is integrated with 16-odd feeds such as local buses, taxi aggregators, banks, petrol stations and retail malls.

Also watch Photo Gallery of Hyderabad Metro Rail.

A unique feature of the system is its advanced signalling and train control technology. Larsen & Toubro had earlier tasked Thales with providing the Hyderabad Metro India’s first signalling system with Communications Based Train Control (CBTC) and Integrated Communications and Supervision (ICS). Says Emmanuel de Roquefeuil, VP and country director for Thales in India, “the Hyderabad Metro will transform mass rapid transit systems in the country. With the advanced CBTC, trains running on three corridors would be controlled and monitored from a state-of-the-art Operation Control Centre (OCC) at Uppal”.

As for project viability, LTMRHL officials say that “betting on the current ridership, the project is likely to break-even by 2022”. Points out NVS Reddy, MD, Hyderabad Metro Rail Ltd (HMRL), “of the 250 metro rail projects in the world, only four are making money — Singapore, Hong Kong, Tokyo and Taipei. While 50% of their revenues come from passenger fares, 45% is from property development and 5% from advertisements and other sources.”

Keeping this in mind, transit-oriented development (TOD), which pertains to development of commercial and retail space on Metro stations, is a vital component of the system’s business model. Says Shivanand Nimbargi, MD & CEO, LTMRHL, “TOD, which has been branded as Hyderabad Next, is expected to contribute about 50% of the overall revenues, with the rest coming from ridership and the advertising business.”

For the retail segment of TOD, each station is being developed as an independent centre catering to the needs of commuters, which include retail, F&B and quick-service restaurants. For advertising revenues, the business model seeks to benchmark and transform the transit-oriented advertising industry to provide better brand recall.

Having decided to bid for Phase II of the project, the concessionaire is looking to raise funds for the purpose. Work on Phase II, expected to stretch over 100 km, may be initiated by 2018-end. “Since this is a unique project, it is likely to attract both foreign and domestic equity partners. We are looking at funds or long-term loans. We hope to have a few equity partners on board, if not immediately, then at the time of completion. This is being worked out by L&TIDPL , the holding company,” a LTMRHL official says.