Rail Analysis India March 2018 Digital Magazine | Page 64
Article | 63
Metro Projects
The table.1 shows the metro rail forecast and actual ridership differences and Project cost overrun comparison with Europe
and North America metro system. (Flyvbjerg, 2007).
Ridership
Project
(Country) No. of
projects (N)
India (2016)
Quartiles
Metro Projects
•
(25/50/75%) Standard
deviation
5 -49/-88/-93 -58.56 Europe
(2007) 6 -29/-4/45 North
America
(2007) 10 -69/-63/-53
Quartiles
(25/50/75%) Average
difference
(%) Standard
deviation
39.34 33/51/70 30.21 25.18
20.7 77.3 39/45/57 43.3 21.3
-60 17 33/42/54 35.8 30.4
•
The first DPR report was prepaid by RITES, A report
data on which metro rail route was relied upon were not
cross checked by DDA. The conflict between RITES and
DMRC were observed for the failure of system. (The fact
that transport modelling for ridership was not carried out
accurately by RITES)
Project Cost
Average
difference
(%)
Hidden Information (Adverse Selection)
64 | Article
Hidden Information (Moral Hazards)
DMRC had prepaid Metro route alignment report, whereas
DDA had proposed Metro rail route and area development
plan simultaneously. (The Dwarka Sector-21 route was
proposed by DDA, but DMRC refused it because the traffic
study data for Dwarka Sector 21 was not supportive).
Overall problem observed in Metro rail decision making process
Table 1 Metro rail ridership and Project cost comparison
Application of Principal-Agent Model on Metro
rail project 1993 it was UT, after it became the state, with the limited
power. The land is subject to centre.
The second section of the research is checking Hypothesis
that correlation of Central and State government for Metro
rail selection mechanisms is fundamentally a Principal-agent
problem. It is expected that all elements associated with the
model, namely conflicting objectives, moral hazards, adverse
selection (Wenling, 2006) are applicable to the metro rail
decision-making process. Due to limitation of words, only one
metro system is briefly explained below; Whereas the implementation of plan and proposal of any
infrastructure liable by the Delhi Government.
Case of Delhi The controversy here is that DDA is development authority
and DMRC is metro authority. During the decision-making
process, DMRC had taken stand alone decision.
The Delhi administrative structure is quite complex, earlier
The Delhi metro rail corporation is Special Purpose Vehicle
(SPV), which were introduced by Central government for
implementation of metro rail project. The DMRC is central
ruled agency; the decision of metro rail implementation is
conduct by DMRC itself.
How the Delhi Metro rail came into being
Conclusions and Recommendation
As discussed in the paper through various case studies it is
observed that, most of the metro rail systems in world are
overestimation in nature. In India, the reason behind failure
of the system is due the forceful decision undertaken by
politicians, lack of policy intervention, and unstructured
metro guidelines. In Indian metro system, a great challenge
still remains with transport modelling and forecast methods,
accurate data collection and analysis. The application of
principal-agent model gives idea on biased decision making
and hidden agendas that influence metro rail project selection.
• Metro project should be supplemented by contribution
from MoUD through levy of dedicated taxes /levies,
capturing the increased land and property value as well
as increased FAR along the metro corridors. (Hong Kong
model)
• Provision of equity in route selection process between
SPV versus Local development authority
• If central projects being developed under government
sector (due to requisite autonomy in decision-making) it
provides, 50:50 JV.
Suggestion
•
• If the projects are developed as the state sector project
MoUD may contribute by way of grant equivalent, as VGF
in a PPP project • During shareholder agreement, liability of GoI would be
limited to equity and sub-ordinate debt agreed at the time
of formation of JV.
• Projects that are viable with admissible VGF without
providing real estate rights to the concessionaire may be
taken under PPP. • JV may provide within the ambit of transparency bodies
and would be audited by Comptroller and Auditor General
(Sonagara, 2014)
• Failure in awarding bid should result in project being
taken in government sector. • Metro board chairmanship should be under the Central
Government.
Conflicting Objective
Absence of coordination and conflict suggestion were
observed between DMRC and DDA for the Metro route
selection process. Master plan was not referred by DMRC
(in first Phase of Metro).
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