Private investment gets push in Centre’s metro policy
The policy makes the PPP (public private partnership) component mandatory for availing central assistance for new metro projects. DS MISHRA, secretary, Union housing and urban affairs ministry
NEW DELHI :The Union cabinet on Wednesday approved the new metro policy, which will promote private investments in a big way in all future projects while also ensuring that cities get to construct metro rail only after they have explored all other measures to de-congest.
“The policy makes the PPP (public private partnership) component mandatory for availing central assistance for new metro projects. Private participation either for complete provisioning of metro rail or for some unbundled components will form an essential requirement,” said DS Mishra, secretary, Union housing and urban affairs ministry.
The Centre has also introduced stringent appraisal process that will make it tough for states to send proposal for building metro rail in its cities.
Wary that many such metro projects -- which are hugely capital intensive -- may not be financially viable and can end up burning a big hole in the government exchequer, the ministry is tightening the norms for appraising proposals sent by states.
The new policy will allow Centre to approve only those projects that ensures a 14% return on investment. Currently, the Centre clears projects offering an 8 % financial internal rate of return (FIRR). “Any project where the EIRR (Economic Internal Rate of Return) is less than 14% will not be considered. The EIRR, along with ridership will also capture economic gains accruing from a project such as job creation, environmental gains by reducing pollution, reducing road accident deaths, etc,” said Mishra.