Is Metro Rail's novelty wearing off?

Is Metro Rail’s novelty wearing off?
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Is Metro Rail’s novelty wearing off? 

Highlights

Is Hyderabad Metro Rail which was hailed as an outstanding infrastructure project, conceived for rapid connectivity in Hyderabad, a modern public transport system and a project which was at the forefront of pathbreaking Multi-modal connectivity losing steam?

Is Hyderabad Metro Rail which was hailed as an outstanding infrastructure project, conceived for rapid connectivity in Hyderabad, a modern public transport system and a project which was at the forefront of pathbreaking Multi-modal connectivity losing steam?

Is the HMRL also proving that the fear expressed by the metro man E Sreedharan in 2017 that PPP model cannot be successful in such projects when the Government of India came out with the Metro Rail policy is not misplaced? In fact if one digs into the various facts and official figures that have been appearing in media from time to time, it is clear that the PPP model in Metro rail projects which were tried out in Mumbai, Hyderabad, and the airport line of Delhi could not become as successful as it was expected. It gives a feeling that they have been launched without significant thought going into long term viability and sustainability.

As Delhi Metro Rail Corporation's Managing Director, the grand old man had said, "Metro projects are very expensive and social projects. Private players will come in only when there is profit." He always said they are not expected to make profits and wanted them to be a joint venture between central and state government on 50:50 participation. He was always reluctant in executing urban rail projects on PPP mode. His forecast now seems to be coming true.

India may boast about its two operational metro rail projects, Mumbai and Hyderabad. But it appears that Metro Rail is bleeding and is suffering huge losses. While the Mumbai Metro Rail is being partnered by Reliance infrastructure Ltd, L&T Metro Rail is in partnership with Hyderabad Metro Rail Ltd. Following mounting losses, the Mumbai Metropolitan Region Development Authority (MMRDA) expressed its preparedness to take over the operation and maintenance of Mumbai Metro's.

Another glaring example of the failed PPP project is Delhi's Airport metro line handled by Reliance and the Rapid Metro Rail Gurgaon Ltd, a private consortium floated by IL&FS (Infrastructure Leasing & Financial Services Ltd.

Now we have reports emanating that the Hyderabad Metro Rail project which is touted as India's largest metro network with 69.2 km operational stretch crisscrossing the entire city is also struggling for survival. A glance at the audited result of L&T Metro Rail Hyderabad shows loss close to Rs 45 crore (Rs 1.5 crore per day). It says that for the financial year ending March 31, 2021 losses have gone up by five times compared to financial year ending March 2020. The approximate loss incurred is said to be Rs 1766 crore for year ending March 2021 as against Rs 382 crore I FY 2020.

One of the reasons for this, is the double whammy of Covid-19. Between March 2020 to September, the revenue for Metro rail was zero due to lockdown. Post lifting of lockdown, the ridership picked up but at a very slow pace. In view of this, the L&T had sought financial support of the state government to deal with the "severe financial stress."

Apart from the impact of COVID-19, another major drawback for low occupancy levels of metro rail in Hyderabad is lack of last mile connectivity and a common ticket for different commutes. Initially, there was lot of enthusiasm among the citizens who used to travel by metro and enjoy the food at the food counters at different stations. The traffic had gone up to about three lakh mark per day. But this enthusiasm proved to be short lived.

Some IT firms operated shuttle services at Hi-Tech City and Durgam Cheruvu stations. L&T also operated such services from stations like Secunderabd East, Tarnaka, Mettuguda etc. But these services were insufficient and the frequency of 15-30 minutes did not work out well if the passenger response was any indication. The travel cost had increased manifold as the passengers have to hire an auto to reach the station to board the train and then again, another auto to reach their places from the alighting point which cost them double the metro fare. Even parking facilities are lacking at most of the metro stations. People cannot use their personal vehicle from their house to metro station, park it there and board the train. This facility is yet to be fully developed.

Employees who form majority of the train users found that sharing a cab with colleagues or using personal vehicle was much cheaper and more convenient.

For those who are familiar with Mumbai or stayed there will vouch that they cannot think of being a Mumbaikar without its suburban rail system. This has proved to be a very reliable transportation system and made the city liveable. This suburban rail system has been able to survive despite running in deep losses only because it is 100 percent government investment.

If global studies are any indication, mass rapid transit system is high capital intensive system. Experts say that metro rail projects across the world have never yielded an investment return of more than 2-3 per cent. Running public transport system hence cannot be a private business exercise. It is the government's which must take up the responsibility.

Apparently, this needs more strategic policy studies. Announcing welfare schemes after schemes during every election is not enough. A greater and more pragmatic policy should be evolved to see that rapid transport system is evolved and managed by government so that the wheels of economy can move at a faster pace.

Compared to other mass rapid transport system, the metro rail projects have been more capital intensive. From land acquisition to civil works, signalling, and rolling stock it is cost- intensive and cannot be a profitable business.

Public-private partnership (PPP) models works well only in projects such as airports, ports and highways and not metro rail as the latter offers low returns while being highly capital intensive and this view is endorsed by experts from infrastructure sector.

That is the reason why Sreedharan had always been saying, "Metro projects are very expensive and are social. They are not expected to make profits. Private players will come in only when there is profit and that is why only government should undertake such projects keeping public welfare in sight."

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