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Metro policy suggests PPP funding model

The maiden Metro draft policy, which is set to come out next month, suggests making it mandatory for state governments to explore the public private partnership funding model.

Published: 28th March 2017 03:45 AM  |   Last Updated: 28th March 2017 03:45 AM   |  A+A-

By Express News Service

BENGALURU: To relieve the huge pressure on the public exchequer caused by the capital intensive nature of Metro Rail projects, the maiden Metro draft policy, which is set to come out next month, suggests making it mandatory for state governments to explore the public private partnership funding model.

State governments going in for the PPP model will have the Centre’s support in the form of Viability Gap Funding of 20per cent as per the National Urban Transport Policy 2006.

At present, only the Mumbai Metro line-1 and the Hyderabad Metro Rail have in place the PPP funding scheme. Gurgaon Metro alone is 100 per cent privately funded.

The Centre-State partnership model in funding is being followed in Delhi Metro, Mumbai (Line 3), Chennai, Bengaluru, Nagpur, Lucknow and Ahmedabad presently.

Funding for the first and second phases of Bengaluru Metro running into Rs 13,500 crore and Rs 26,405 crore respectively are being carried out with 35 per cent funding by the state, 20 per cent by the Centre and 45 per cent mobilised through external borrowings. “It could have a positive impact on Namma Metro. We will have to wait and watch,” sources said. The draft also calls upon pricing of Metro tickets to be ‘such so as to incentivise model shift from private vehicles.’

Tax-free bonds

As in rail, road and irrigation sectors, Metro Corporations will issue tax-free bonds to raise resources. PSUs like National Highway Authority, Rail Catering and Tourism Corporation can issue such bonds.

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