Metro Projects 64 | Article
• Hidden Information ( Adverse Selection )
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 )
• 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
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 .
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
• Projects that are viable with admissible VGF without providing real estate rights to the concessionaire may be taken under PPP .
• Failure in awarding bid should result in project being taken in government sector .
• 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 .
• During shareholder agreement , liability of GoI would be limited to equity and sub-ordinate debt agreed at the time of formation of JV .
• JV may provide within the ambit of transparency bodies and would be audited by Comptroller and Auditor General ( Sonagara , 2014 )
• Metro board chairmanship should be under the Central Government . www . railanalysis . com