CHENNAI: The deadline to complete the Chennai Metro Rail Limited’s Phase II will be extended by almost a year due to the fiscal constraints faced by the state government under the Fiscal Responsibility and Budget Management (FRBM) Act, according to Chief Minister M K Stalin.
In a memorandum presented to Prime Minister Narendra Modi in Delhi on Friday, Stalin said the state government had instructed CMRL to reduce the pace of work and take a budgetary cut of Rs 1,000 crore from Rs 10,000 crore to Rs 9,000 crore last year. For the current financial year too, just Rs 8,000 crore of the planned Rs 12,000 crore is likely to be spent for the project.
“The commissioning dates of various stages are being delayed by almost a year, pushing the final completion date from December 2027 to December 2028. This will result in time and cost overruns,” Stalin said.
The CM also voiced concern that CMRL, as an entity, may become unsustainable if it fails to secure principal debt of Rs 33,593 crore and subordinate debt of Rs 17,434 crore for Phase-II of the project. “Without corresponding equity contribution, the unfavourable debt to equity ratio will potentially render CMRL unsustainable as a going concern,” Stalin said.
“If the project receives funding as recommended by the Public Investment Board, Chennai Metro will get an equity infusion of Rs 10,814.8 crore. However, as a state sector project, this equity infusion by the state alone is not possible as it will affect the company’s ownership structure.
Equity participation by both the governments is therefore absolutely necessary,” Stalin said in the memorandum. He said most of the metro rail projects in India are financed by the union government under the equal equity contribution model.
Meanwhile, sources said the second phase project under Corridor 4 from Poonamallee to Kodambakkam Power House has been prioritised and funds have been allocated for this route.
There will be a delay of another six months for commissioning of the project from CMBT to Shollinganallur. Sources said the slowdown of works started after October 2023.
Regarding the Asian Infrastructure Investment Bank’s report that the project is progressing steadily and sufficient funds are being allocated to the project by the government, sources said it reflects the status as of December 2023, of Corridor 4 only, which is a priority corridor.
What the CM said
CMRL, as an entity, may become unsustainable if it fails to secure principal debt of
Rs 33,593 crore and subordinate debt of
Rs 17,434 crore for Phase-II of the project
If the project receives funding as recommended by Public Investment Board, Chennai Metro will get an equity infusion of `10,814.8 crore
Most metro rail projects in India are financed by the centre under the equal equity contribution model