Metro rail companies seek self-funding options

Metro railway companies such as Delhi Metro Rail Corporation (DMRC) and Bangalore Metro Rail Corporation (BMRC) are coming up with ideas for alternative sources of revenue, at a time when several metro rail plans across the country are being stalled, questioning the financial viability of this mass transport system.

The companies’ aim is to reduce dependency on government funds. DMRC has signed an agreement with the Madhya Pradesh government to procure 150 Mw of solar power to meet its auxiliary power requirements at some stations. It currently procures thermal power at ~6 per unit. Solar power will cost around ~4 a unit. DMRC is estimated to save ~4 billion a year with such an arrangement in place.

“This solar power from MP is expected by October-November,” DMRCL’s managing director Mangu Singh said.

This year, the company has planned to generate a fourth of its annual revenue from advertisements and other such sources, without depending on passenger fares, a company official said. He was speaking at an event jointly organised by the ministry of finance, Asian Infrastructure Investment Bank,

“THIS SOLAR POWER FROM MP IS EXPECTED BY OCTOBERNOVEMBER”

Mangu Singh DMRCL’s managing director

Research and Information System for Developing Countries and the Associated Chambers of Commerce and Industry of India.

DMRC, for instance, offers consultancy services to the counterparts across India. “We expect our income from advertising to be in the range of ~1.3-1.6 billion this year,” a DMRCL official said.

The firm has floated an Expression of Interest to take coaches on a 35-year lease, instead of purchasing these, after holding a series

“WE ARE SPEAKING TO REALTORS, HOTELIERS AND IT COMPANIES WITH SIMILAR PROPOSALS”

Deepa Kotnis Executive director of BMRC

of discussions with manufacturers, including Alstom, Bombardier and others.

One DMRC coach costs about ~120 million and a lease agreement for around 150 coaches is expected to bring down its capital expenditures (capex) by ~20 billion over the procurement period. It plans to take 15 per cent of its total requirement on lease for the next phase of expansion. “A similar agreement can be worked out for the escalators and lifts as well,” the official said.

BMRC is not behind its Delhi counterpart when it comes to selffunding. Its ~42-billion project of building a corridor in Bengaluru’s Outer Ring Road area in the city has not received any funding from the Centre or the state government.

Deepa Kotnis, executive director of BMRC, said the company had signed a ~1 billion initial agreement with Intel for the 17-km project that would have 14 stations. Under its terms, Intel will have nomenclature rights for a station. The computer hardware major will also get 1,000 sqft space to install bill boards and an additional 3,000 sqft for other commercial purposes. A similar agreement with the Embassy Group is under process.

BMRC is also in talks with Infosys, Biocon, and Prestige Group to fund the corridor.

“We are speaking to realtors, hoteliers and IT companies with similar proposals. Currently, the offer comes as a bundled one but can be unbundled for individual companies at a later stage if the need be,” she said.

BMRC plans to raise around ~5 billion in a few months from such initiatives that can scale up to ~11 billion.

“A large part of the required capital can be funded this way. We are looking at monetising space, which can reduce our borrowing costs,” she added.