THE PPP X-CHANGE, The GOI-ADB PPP Workshop, January 2010

Ashwini Bhide

Joint Metropolitan commissioner,

MMRDA,Mumbai

Urban Transport

Case Study: Mumbai Metro Project

Overview:MMRDA was established in 1975 under MMRDA Act

MMRDA is a Regional Planning Authority for MMR and Special Planning

Authority for certain notified areas within MMR.

Development Financing Agency for ULBs within MMR.

Nodal Agency for Centrally Sponsored Schemes.

Co-ordination Agency for Infrastructure Projects implemented by different

agencies.

Implementing Agency for various infrastructure projects within MMR with

Transport Infrastructure as the primary focus

Mumbai Metropolitan Region Development Authority

Overview:• 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 2

K.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

Mumbai Metro Rail Project:

Versova-Andheri-Ghatkopar

Charkop-Bandra- Mankhurd

Colaba-Mahim-Bandra

Charkop - Dahisar

Ghatkopar – Mulund

BKC-Kanjur Marg via Airport

Andheri(E) - Dahisar(E)

Hutatma Chowk - Ghatkopar

Sewri – Prabhadevi

Project Case Details

MMRDA equity :Rs.133Cr(26%)

Reliance Equity :Rs.353.1Cr(69%)

VioliaTransport Equity :Rs.25.59 Cr.(5%)

Elevated corridor of 11.77 km of total

Length with 12 Elevated stations

Minimum ground clearance : 5.5 m

Maximum Gradient : 4.0 %

Minimum Curvature : 100 m

Platform Length (6 Coaches):135 m

Project Cost: Rs 2356 Cr

Project Period: 2007 to 2012

Likely to be completed by December

2010

Viability Gap : Rs 650 Cr (28%)

Concession period : 35 years

Consessioning Authority : MMRDA

Concessioner : Joint Venture of Reliance Energy

Ltd and Violia Transport of France

SPV : MMOPL

Metro I : Varsova Andheri Ghatkopar Corridor

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Salient FeaturesProject Overview and Salient Features

This corridor connects densely populated areas of

western & eastern suburbs and two important

suburban railway stations

High ridership forecast

Will provide access to important industrial and

commercial area

Will reduce the journey time from 71 min to 21 min between

Versova & Ghatkopar

Fare of Rs. 8.00 (up to 3 km) & Rs. 10.00 (> 3 km and <km)&

Rs.12 (> 8 km)-2009 Prices

Fare Revision Mechanism - Revised at the rate of 11 % every 4th

year.

Metro I : Varsova Andheri Ghatkopar Corridor

Expected daily ridership

2011: 5,15,000

2021: 6,64,000

2031: 8,82,000

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VAG Corridor: Overview and Salient Features

• Scope of the Project – covers the finance, design, construction, testing ,

commissioning, operation and maintenance.

• Basis of the Concession Agreement –based on Model Concession Agreement

implemented by NHAI for road projects, modified and adopted to suite

requirements for implementing a rail based system.

• Nature of the Concession to be Granted –

• To investigate, study, design, engineer, procure, finance, develop, complete,

commission, operate and maintain the MRTS project Facility and;

• To levy, demand, collect and appropriate Fare from commuters and persons liable to

payment of Fare using the MRTS Project facility.

• Period of Concession: 35 years including construction period commencing from the

Appointed Date, i.e. signing of Concession Agreement including 5 years of construction

VAG Corridor: Overview and Salient Features

• Capital Contribution of Rs 650 cr

• Provide necessary space/land for Car

Depot and for locations of electric

sub stations on a nominal lease

charge of Rupee One per annum (Rs

1/annum) , free from all

encumbrances.

• Resettle and Rehabilitate (R & R) all

affected persons, as necessary

• Cost of shifting of utilities to be

borne by MMRDA

Risk sharing: Roles and responsibilities…

• No guarantee whatsoever with regard to

ridership and revenue has been provided.

Entire risk is to be borne by SPV.

• No assurances regarding parallel

competing facility has been given.

• Performance and Technical standards in

accordance with best industry practices

have been specified.

• Concessioner „s source of revenue: Fare

Box Collection, Advertisement Revenues,

100 square meter commercial space for

passenger amenities on each station

MMRDA Concessionaire

VAG corridor: Bidding Process

Eligibility Criteria

An Indian Company or a Company authorised to

carry out business in India or a JV with an

Indian Company

Net worth of more than Rs.5,000 million or US$

112 million

Annual Turnover for the last 3 years of more than

Rs.3,650 million or US $ 81.0 million

Relevant experience in developing, constructing or

operating a Mass Transit System with

minimum capacity of 20,000 PHPDT.

Evaluation

• First Stage-Technical Proposals

• Evaluate Bids for Financial Capability and Technical

Competence as per evaluation criteria

• Scrutinize system design proposals for conformity

o Technical and Performance specifications

• Obtain bidders‟ confirmation to incorporate

proposed modifications if any to provide level

playing ground

• Those bidders scoring 75% and above in technical

evaluation were eligible to submit financial proposal

• Second Stage-Financial Proposals:

• Evaluation of Business Plan and other formats

submitted as per RFP Documents

A bidder asking for minimum capital contribution to be selected as Preferred Bidder

Two stage evaluation process

VAG corridor: Bidding Process

•Received bids: five

•Technically qualified: three

• Mumbai Metro Consortium” led by L&T- Gammon Infrastructure Ltd – Siemens

and BEML

• “Mumbai Metro One consortium” led by Reliance Energy Limited (REL) –

Connex France

• “IICCU consortium” led by Infrastructure Leasing & Financial Services Limited

– ITD Thailand-Unity Infra

•Financial proposals received: two

Mumbai Metro One and IICCU

•Preferred Financial bid: Mumbai Metro One : Cost- Rs 2356 Cr and Capital Contribution: Rs 1251 Cr

•Negotiations carried out with the lowest bidder to reduce the capital cost

•As a result demand for capital contribution reduced from Rs 1251 Cr to Rs 650 Cr

•Negotiated offer evaluated by the Bid Evaluation Committee appointed by the Metropolitan

Commissioner

•Approval by the state cabinet to the revised offer

Salient features of Financial Offer

Parameters Mumbai Metro One (MM1)

Debt : Equity 70:30

Total project cost Rs. 2356 Crores

Capital Contribution (VGF) Rs 650 Crores

Total Equity – Rs 513 cr

REL : 69% ~ Rs. 353 Crores

Connex: 5% ~ Rs. 26 Crores

MMRDA: 26% ~ 134 Crores

Debt Rs. 1194 Crores

Total taxes and duties Rs. 296 Crores

Land To be provided free of cost

VAG Corridor: Investment Details

Bidding Process – Time Schedule

Milestone Date

Govt. of Maharashtra approval 19th August, 2004

Invitation of Global Bids 21st August, 2004

Pre-bid meeting 23rd November 2004

Technical bids 16th May, 2005

Invitation of Financial Bids 15th September, 2005

Receipt of financial bids 10th January, 2006

Evaluation of Financial bids January, 2006

Negotiations with the lowest bidder February-May, 2006

Negotiated offer 10th May, 2006

LOI issued after GOM approval June 2006

VAG Corridor :Milestone Achievements

• Public Information Centre was commissioned

• along the alignment at Sakinaka in 26th October, 2007.

• Partial ROW was provided to SPV on 17th December, 2007.

• Land for casting yard, Electric sub Station was

• provided to MMOPL by MMRDA in January, 2008.

• Actual construction work was started from 08th Feb,2008.

• Land for labour camps was handed over to MMOPL at Mulund and Malwani on 25th Feb,

2008 & 7th March, 2008.

Milestone Achievements ….

• SPV named Mumbai Metro One Pvt. Ltd. was incorporated on 22nd December,

2006

VAG Corridor: Milestone Achievements

• Land for car depot at D N Nagar handed over to MMOPL on 4th August, 2008.

• Lenders apprised the project and accorded their approval.

• O & M agreement between MMOPL & Veolia transport signed on 26th Sept, 2008.

• Financial closure achieved on 3rd Oct, 2008.

• Home guard Land handed over to MMOPL for casting Yard on 17th Jan, 2009.

• Western railway approved the GAD of major Bridge at Andheri on 17th march, 2009.

• GOI accorded approval for VGF up to 20% of project cost.

VAG Corridor: Milestone Achievements ….

Milestone Achievements ….

More than 90% ROW handed over to MMOPL

Utilities mapping, condition survey of adj. buildings completed and the work for utility

shifting is in progress.

Consortium of M/s Systra & Parsons Brinkerhoff are appointed as the Engineering and

Project Management Consultancy (EPMC) Consultants.

The contracts for the civil works, supply of rolling stock, track work, power supply,

Electrification, Signaling, Communications Automatic Fare collection System etc. awarded.

M/s Louis Berger Inc. in Association with RITES Limited are appointed as “Independent

Engineer”

Physical Progress: 70% foundation work completed, girder launching started at certain

stretches

VAG Corridor: Present Status

Pier Cap Launching

Viaduct @ D N Nagar Station Stretch

Viaduct @ Kamdhenu Junction Stretch

Viaduct @ J B Nagar

Civil Works – Pier Cap Casting

Civil Works – Pier Cap Stacking

Civil Works – Viaduct : Girder

Ghatkopar Station

Marol Naka Station

Will Cross the Andheri Flyover

Biggest pile cap foundation

on land for any bridge in the

country. 56 ft wide, 26 ft

wide & 16 ft deep

East Side

East Side

Tallest pier on land for any Metro bridge in the country :

East Side Pier of WEH Bridge, 60 ft

West Side

Marol Naka Station

Sakinaka Station

Project Case Details

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Aryasamaj Chowk

National College

Charkop

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Versova

Mankhurd

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CharkopMalad (M)

Kasturi Park

Bangur Nagar

Oshiwara

Juhu

Ville Parle (M)

Nanavati hospital

Khar (M)

Shastri Nagar

DN Nagar

ESIC Nagar

JVPD

Samartha Nagar

Charkop – Bandra – Mankhurd AlignmentMetro Line 2: Charkop Bandra Mankhurd

Route Length 31.87 Km

Number of stations 27 –All Elevated

Daily passengers in Lakhs

2011 12.75

2021 18.77

2031 22.16

Maintenance Depot Charkop

Mankhurd

Interchange facilities D.N Nagar, Bandra, Kurla and

Mankhurd

Salient Features of Charkop –Bandra- Mankhurd Corridor

Project is being implemented on BOT / PPP format

Metro Line 2: Project Details

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.

The Pre-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

• Essar (India, Mumbai), Alstom (France), Lanco Infratech (India)

• GVK Power & Infrastructure Ltd. (India, AP), Yeoh Tiong Lay (Malaysia),

Bombardier Transportation (USA)

• IL&FS (India), Transportation Network Ltd (India, Mumbai), Punjleoyd Ltd (India,

Delhi), Soma Enterprise Ltd. (India, Hyderabad)

• Larson & Tubro Ltd. (L&T Ltd) (India)-IDPL, GE India Industries Ltd. – IIPL, CAF

• Tata Power Company Ltd. (India, Mumbai), Pioneer Infratech Pvt. Ltd (India, New

Delhi), Mitsubishi Corporation (Japan).

• Reliance Infrastructure Ltd. (India, Mumbai), SNC-Lavalin Inc. (Canada), Reliance

Communication Ltd. (India, Mumbai).

• Reliance Industries Ltd. (India, Mumbai), Siemens AG (Berlin -Germany),

Gammon India Ltd. (India , Mumbai).

DEA sanctionedVGF grant of Rs. 1532 Cr. in Nov. 2008

Financial Proposals were finally received on 29th May 2009 after few extensions of

bid due date as per request of the bidders.

After initial extensions with the help of ADB‟s PPP expert working with the state

government confidence building meetings were held with the selected bidders and

their concerns were addressed.

• As a result one bid from consortium led by M/s Reliance Infrastructure Ltd. was

received demanding a grant of Rs. 2298 Cr.

• The Concession Agreement will be signed by GoM. MMRDA will however be the

project implementing agency as well as the government instrumentality as per G.R

Dated 17th March 2009

• GoM/MMRDA will not hold any equity in the SPV. The concessionaire will however

allot one Golden Share in favour of the government which will entitle the

government to nominate one Director on the Board of the Concessionaire

Continued …

GoM Approved the project 14.11.2006

Proposal for VGF Funding 16.11.2006

Invitation of Global Bids 18.02.2007

PQ issued to Applicants (32) 01.03.2007

PQ applications submission date (8 applicants submitted) 11.06.2007

Submission of Technical Proposal

(7 Pre-qualified applicants were asked to submit the Technical

proposal)

30.11.2007

Proposal for In-principle approval for VGF for revised cost of

Rs 8250 Cr

16.07.2008

Final Bid Documents issued to Bidders 02.02.2008

Metro Line 2: Milestones Achievement

Bid documents approved by GoM 26.03.2009

Submission of Financial proposal 29.05.2009

LOA issued 03.08.2009

Laying of Foundation Stone by Hon‟ble President of

India

18.08.2009

Formation of SPV 29.10.2009

Signing of the Concession Agreement 21.1.2010

Financial Closure October 2010

* Commencement of Work September 2010

Metro Line 2: Milestones Achievement

Financial Obligation on MMRDA

• Project Cost Rs 8250 Cr.

• VGF *Rs 766 Cr.

• Utilities shifting & R&R Rs. 382 Cr.

• Independent Engineer Fee Rs 39 Cr.

• Land Acquisition Rs 665 Cr.

• Total Rs 1852 Cr.

* VGF of Rs. 1532 Cr. will be provided by GoI,

Total VGF Grant demanded by Bidder is Rs. 2298 Cr.

Distance Metro Fare (in Rs.) 2007-08

0-3KM 7

3-8KM 9

8-12KM 11

12-15KM 13

15-20KM 15

20-25KM 18

25-30KM 20

>30KM 22

Fare Structure for Mumbai Metro Line 2

The METRO fare to be revised at the rate of 11% every fourth year

Key-Lessons:-

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Public Private Participation (PPP) model as the preferred mode of implementation for

capital-intensive rail-based urban transit projects due to budgetary resource crunch.

Adoption of model transaction documents will expedite competitive bidding process.

Realistic Eligibility criteria for the lead and other consortium members shall ensure

technically strong & financially sound Special PurposeVehicle (SPV).

Potential Bidders‟ concerns must be addressed adequately through process of

consultation.

Model Concession Agreement finalized by Planning Commission needs further fine-

turning especially with reference to technical aspects.

Only a well structured project will be attractive to private investors.

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Risk-allocation has to be equitable; Tendency to pass on maximum risk to

the Concessionaire will prove counter productive.

Ridership risks-area of major concern for the private investors; Realistic

provisions will make projects more bankable & minimise demand to Viability

Gap Fund (VGF).

Property Development as a part of the concession does reduce demand for

VGF but lack

For the Operation & Maintenance phase, Concession Agreement must have

transparent, easy to implement and monitor provisions to achieve desired

quality of service.

For success of PPP model conducive environment is a MUST.

Key Lessons

Thank you