Metro railway companies look at financial viability to reduce govt funding

Non-fare revenue rolls in for IL&FS Rail's Rapid Metro in GurugramWith the financial viability of mass rapid transport system coming into question and leading to the postponement of several metro railway projects in the country, companies such as Delhi Metro Rail Corporation Ltd (DMRCL) and Bangalore Metro Rail Corporation Ltd (BMRCL) are coming up with innovative approaches to either open alternative revenue streams or reduce their costs. In turn, it will lead to reducing their dependency on government funds. DMRCL has signed an agreement with Madhya Pradesh to procure 150 Mw of solar power which will fuel its auxiliary power requirements at some stations. While its current procurement of thermal power costs Rs 6 a unit, solar power will cost around Rs 4 per unit. It is estimated that as a result, DMRCL can reduce costs to the tune of Rs 4 billion a year. “This solar power from Madhya Pradesh is expected to come in from October-November this year,” DMRCL’s managing director Mangu Singh said. An official from DMRCL said that this year, the company plans to churn 25 per cent of its annual revenue from the non-fare vertical. He was speaking at an event on Mass Rapid Transport Systems for Urban Areas: Opportunities and Challenges organised by the Ministry of Finance, AIIB, Research and Information System for Developing Countries and Assocham. It is offering consultancy services for other metro railway projects in India and Singh wants to keep the consultancy focus on India only in the near term. “We also think that our income from advertising space will be in the range of Rs 1.3-1.6 billion for this year,” another official from DMRCL said. After a series of talks with metro railway coach makers including Alstom, Bombardier and others, it has also floated an expression of interest under which, instead of an outright purchase of coaches, it will take them on a 35-year lease. Typically, one car of DMRCL costs around Rs 120 million and a lease agreement for the procurement of around 150 coaches is expected to bring down its capex requirement by Rs 20 billion.

Source: Business Standard