Critical ANalysis of Mumbai Metro project - Phase I

1. Mumbai Metro
Rail Project
GROUP – 8
Neeraj Gurbani A020
Akshiv Pathania A037
Sameer Sehgal A047
Karan Shah A050
Jinesh Vora A056

2. Agenda
Mumbai
Transport
Infrastructure:
Overview
Mumbai
Metro :
Conceptua
lization
Project
Planning
Financial
Structuring
Key
Learnings &
Recommen
dations
Risk
Managem
ent
Project
Execution
Bidding
Process

3. Mumbai Transport Infrastructure:
Overview
12.8
%
9.2
%
78.0
%
Private Vehicle Intermediate Public transport Public transport
78%
Suburban rail – 56%
BEST – 22%
 13.0 million people travel daily
by Public Transport
 Train transportation – Lifeline of
Mumbai
Mumbai is Public Transportation Dependent city

4. Mumbai Transport Infrastructure:
Loopholes
Rail Network:
 Failed to keep pace with demand
 Suburban rail traffic increased by 6 times while the
capacity increased by only 2.3 times
 4500/5000 passengers travel per train against the
carrying capacity of 1750 resulting in unbearable
overcrowding; Strong mismatch in demand and supply
Bus Network:
 Constraints to expand the existing road capacity to
meet the future demand
 Number of cars in Mumbai has grown by 51% in the
last six years; Resulting in road congestion &
Environmental pollution
 Not serving the purpose of the Feeder service to rail
network
Mumbai needs an efficient, economical and
environment friendly Mass Transit System

5. Mumbai Metro Project:
Serve areas not served by current
system
Higher capacity
Faster travel
Attractive to commuters
Environment Friendly
Improve overall mobility
Gap Analysis
Access to important industrial and
commercial area
Additional 7 mn commuters
Time reduced to 21 min from 71 min
between Versova & Ghatkopar (Ph-I)
Provide a rail based connectivity within
an approach distance of 1 to 2 km; Fare
Reduction in air and noise pollution
East-West rail based connectivity to Central
and Western suburbs
Mumbai Metro is the best solution for Mass Transit System

6. Mumbai Metro
Overview 3 Phases
PHASE I
Total Length of 62.68 Km (approx)
• Versova – Andheri – Ghatkopar  11.07 Km
• Charkop – Bandra – Mankhurd  31.8 Km
• Bandra – Colaba  20 Km
PHASE II
Total Length of 40 Km (approx)
• Charkop-Dahisar  7.5 Km
• Ghatkopar – Mulund  12.5 Km
• BKC Kanjurmarg via Mumbai Airport – 19.5 Km
PHASE III
Total Length of 39.80 Km (approx)
• Andheri East – Dahisar East route  18 Km
• Flora fountain and Ghatkopar route  21.8 Km

7. Mumbai – Metro Phase I

8. PROJECT PLAN
Phase I Line 1 – Versova – Andheri - Ghatkopar
India’s first PPP Metro Project, based on the
Build, Own, Operate and Transfer (BOOT) model
Elevated 11 Km line to Ghatkopar via Marol,
Chakala and Saki Naka
AUGUST 2004 – Approval received from the
Government of Maharashtra and Global Bids
were invited through Expression of Interest (EOI)
SPV – Mumbai Metro One Private Limited
(MMOPL), a JV between Reliance Infrastructure,
Veolia Transport and MMRDA
Concession period of 35 years including the
construction period of 5 years
TIMELINE FOR THE PLANNED PROJECT
Govt. of Maharashtra approval 19th August, 2004
Invitation of Global Bids 21st August, 2004
Pre-bid meeting 23rd November 2004
Technical bids 16th May, 2005
Invitation of Financial Bids 15th September, 2005
Receipt of financial bids 10th January, 2006
Evaluation of Financial bids January, 2006
Negotiations with the lowest
February-May, 2006
bidder
Negotiated offer 10th May, 2006
LOI issued after GOM approval June 2006
Commencement of Construction Feb 2008
EQUITY HOLDING (%)
26% Reliance Infrastructure
Estimated cost of the project – Rs 2356 crores 5% 69%
Veolia Transport
MMRDA

9. FINANCIAL STRUCTURING
Line 1 – Versova-Andheri-Ghatkopar
Out of the total estimated project
cost, cumulatively 27.5% was
contributed as VGF by the GOI
and Government of Maharashtra
The remaining Rs1706 crores was
financed by 70% Debt –Rs. 1193 Cr
and 30% Equity – Rs. 513 Cr
The 70% debt was provided by a
consortium of banks led by IDBI
Total project
Cost
Rs 2356 Crores
Remaining
Rs 1706
Crores
70% Debt
Rs 1193
Crores
Consortium of banks
IDBI, Corporation Bank, Karur
Vysya Bank, Canara Bank,
Oriental bank of commerce
and Indian Bank
30% Equity
Rs 513
Crores
Viability Gap
Funding
Rs 650 Crores
VGF
GoI-20%
GoM-7.5%
Reliance Infra - 69% ~ Rs. 353 Cr.
Veolia Transport - 5% ~Rs. 26 Cr.
MMRDA - 26% ~ 134 Cr.
Free of Cost:
• Space for Car Depot
at DN Nagar Station
and Ghatkopar Station
• Land for the project

10. Bidding – Metro Phase I Line 1
Eligibility Criteria
An Indian Company or a Company authorized to
carry out business in India or a JV with an Indian
Company
Net worth of more than Rs.5,000 million or US$
112 million
Annual Turnover for the last 3 years of more than
Rs.3,650 million or US $ 81.0 million
Relevant experience in developing, constructing
or operating a Mass Transit System with
minimum capacity of 20,000 PHPDT.
First Stage-Technical Proposals
Evaluate Bids for Financial Capability and
Technical Competence as per evaluation
criteria
Scrutinize system design proposals for
conformity - Technical and Performance
specifications
Obtain bidders‟ confirmation to incorporate
proposed modifications if any to provide level
playing ground
Those bidders scoring 75% and above in
technical evaluation were eligible to submit
financial proposal
Second Stage-Financial Proposals
Evaluation of Business Plan & other
formats submitted as per RFP documents
Two Stage Process
Technical Proposals Financial Proposals

11. Bidding – Metro Phase I Line 1
Received Bids - 5 Technically Qualified - 3
Financial Proposals
Received - 2
Preferred Financial Bid
"Mumbai Metro One
consortium” LED by Reliance
Energy Limited and Connex-
France
"Mumbai Metro One
consortium” LED by
Reliance Energy Limited
and Connex-France
“IICCU consortium” led by
Infrastructure Leasing &
Financial Services Limited –
ITD Thailand-Unity Infra
Mumbai Metro Consortium”
led by Gammon Infrastructure
Ltd – Siemens and BEML
Hindustan Construction
Company and RITES
Shaktikumar Sacheti Limited
and Lingkaran Metro
 Bidding Parameter - A bidder asking for minimum capital contribution to be selected as Preferred Bidder
 Details of Preferred Financial Bid- Cost- Rs 2356 Cr and Capital Contribution: Rs 1251 Cr
 Negotiated bid - Negotiations were carried out with the lowest bidder to reduce the capital cost. As a result demand for
capital contribution reduced from Rs 1251 Cr to Rs 650 Cr
 Approvals - Negotiated offer was evaluated by the Bid Evaluation Committee appointed by the Metropolitan Commissioner
and approved by the state cabinet

12. Bidding – Metro Phase I Line 2
Charkop - Bandra – Mankhurd corridor
Technically Qualified Bidders
Reliance Infrastructure-SNC
Lavalin, Canada-Reliance
Communication
GE India-L&T-CA-IDPL
Tata Power-Mitsubishi-Tata
Realty's Pioneer Infrastructure
GVK-Bombardier-YTL
Infrastructure Leasing &
Financial Services Limited -
Soma Constructions-Punj Lloyd
Essar-Alstom
Key Highlights of Project
„Concession period - 35 years
with an extension clause of
another 10 years.
Financial closure :
Debt - Rs 6,931 Cr
Equity - Rs 2,332 Cr
Equity share : Reliance Infra - 74%
SNC Lavalin - 26%
Implementation under PPP format
Project cost:
MMRDA’s estimate : Rs 8,250 Cr
R-Infra’s estimate : Rs 11,000 Cr
VGF - Rs 1,532 Cr by GOI,
Rs 766 Cr by GoM
Construction work stalled due to
issues
Project Winner
Reliance
Infrastructure
Only one that made a
financial bid
Bid Submitted
Rs 2,298 Cr
The grant from the state
& Central governments

13. Bidding – Metro Phase I Line 3
Eligibility Criteria Milestones in Bidding Process
Initial Eligibility Criteria Modified Eligibility Criteria
Average annual turnover of
$175 million for five years
generated specifically from
the execution of
underground railway works,
excluding hill tunnels
Average turnover of $175
million for five years from
billing for civil
infrastructure works
completed or in progress
All member companies of
a consortium or JV were
required to meet the
minimum experience
criteria individually
The combined experience
of a consortium was
required to meet the
minimum experience
criteria
In technical qualification
the end date for
experience limit of bidders
for 10 years was December
2012
The end date for
experience limit of bidders
for 10 years ending
December 2012 was
revised to March 2013
Sept 2013
• Invitation for the pre-qualification bids
Oct 2013
• Expected Submission of bids
Nov 2013
• Expected Evaluation of Pre-Qualification of
Bids
Jan 2014
• Re-Invitation for the pre-qualification bids
Mar 2014
• Submission of pre-qualification bids
July 2014
• Expected Issue of detailed tenders
Oct 2014
• Expected award of contract to successful
bidder
Jan 2015
• Expected Commencement of construction
Phase
 14 international and national firms have submitted the pre-qualification bids for detailed design and construction of
underground stations and associated tunnels for the project
 Bidders are as follows :
AFCONS-KMB, CEC-ITDCEM-TPL, CTCEG-PIIPL, Dogus-Soma, IL & FS-CR25G, J Kumar- CRTG, L&T-STEC,
MOSMETROSTROY-HCC, OHL-SKE&C, Pratibha-GDYT Consortium, Sacyr CMC ESSAR, Salin Impregilo-Gammon,
STRABAG-AG-Patel and UNITY-IVRCL-CTG.

14. Risk Management
Types of
Risk
Construction
Risk
Operational
Risk
Market/
Demand Risk
Financial
Risk
Political Risk
Time and Cost overruns or shortfall in performance parameter of the
project
Technical performance of the project during the operational phase
can fall below the levels projected
Possibility that the market conditions assumed in determining the
viability of the projects are not realized
Variation in Interest Rates and/or the risk of not being paid for services
delivered by the investors
Any disruption in construction or operation of an project due to political
decisions

15. Risk Mitigation
Risk
Identific
ation
•Identifying the events or actions which effects the viability of the project
Severity
of Risk
•Incase the event occurs, the effect of the same on the cost/time of the project
Risk
Allocati
on
•Identifying and allocating the risk to the party who can manage it the best
Risk
Mitigation
•Steps/Actions which can be taken to reduce the chances of event occurring
Risk
Pricing
•Cost of addressing the risk needs to be determined and suitable provisioning
made

16. Risk Allocation Framework (1/2)
Risk Type Sensitivity Primary Risk Bearer Comments
Delays in Land
Acquisition
High Government
To be handed over to the concessionaire by MMRDA. If
unable to do so, MMRDA is liable to extend project
completion date, financial closure date & concession
period
Financing Risk Medium Private Sector
Has to achieve financial closure in 180 days after signing
the contract. Provision with MMRDA to extend the period
by another 180 incase not achieved
Planning Risk Medium Private Sector
Need to execute the project in conformance with the
specifications and standards specified in the agreement
Regulatory,
Approval Delays
Low Private Sector
Has to obtain all required clearances/permits from the
GoI/GoM for implementation of the project
Pre-Operative Risks
Construction Phase Risks
Risk Type Sensitivity Primary Risk Bearer Comments
Design Risk Medium Private Sector
Have to submit all drawings and schedule to MMRDA for
review. Also to be scrutinized by an independent
engineer
Construction Risk Medium Private Sector
Performance security of Rs.14 crore for due and faithful
performance of its obligations. Renewed from time to
time and replenished every 30 days. Penalty of Rs.2
crore/day for missing any milestone
Change in Scope
Risk
Low Government
Additional work outside scope would be ordered by
MMRDA performed by private operator and
subsequently reimbursed
Financing Risk Medium Private Sector
Only 85% of VGF to be released during construction
period of the project. Remainder of funds after 6 months
of project being operational

17. Risk Allocation Framework (2/2)
Risk Type Sensitivity Primary Risk Bearer Comments
Technology Risk Low Government/Private Sector
Project to be executed in conformance with the
specifications and standards specified in the
agreement
O&M Risk Medium Private Sector
TO submit an operations and maintenance manual to
MMRDA for approval. Risk mitigation by allowing
concessionaire to appoint O&M contractors
Market Risk High Private Sector
The private operator would be allowed to levy and
collect the fares. The fares would be revised at a rate
of 11% every fourth year. No revenue guarantee from
the government
Performance Risk High Private Sector
Private operator has to hold at least 51% equity during
construction and in the 2 years after completion of the
project. Lead consortium member will have to hold at
least 26% equity stake in the project for a minimum
period of 15 years after project completion
Operational Phase Risks
Handover Risks
Risk Type Sensitivity Primary Risk Bearer Comments
Handover Risk Low Private Sector
Joint inspection by both parties 60 months prior to the expiry
of concession period to gauge compliance with
serviceability requirements defined in the agreement,
private party to pay charges if found deficient
Private Operator
Event of Default
Low Private Sector
Only lenders are protected to equity holders bear a major
risk. MMRDA to take over the assets and is liable to pay
90% of debt less insurance claims

18. Mumbai Metro Project: Execution
 2006: Former PM Manmohan Singh laid the foundation stone for Metro One project in June
 2007: Reliance Infra led MMOPL awarded the contract for developing the 11.4 km Versova-
Andheri-Ghatkopar (VAG) corridor
 2008: Actual construction on the project began in Feb 2008, and the corridor was expected to
be operational by 2010-end
However, MMOPL missed as many as 10 deadlines set for completion of the project
including the March 2013 deadline set by Maharashtra CM Prithviraj Chavan
 Reasons for delay:
 MMRDA supposed to make 59% land
available to MMOPL but could manage
only 45% when construction began
 Complete land needed for construction
could be handed over to MMOPL only in
2012
 ROW and legal issues with removal of
encroachments and religious structures
also stalled construction progress
 Unavailability of records of underground
utilities forced MMOPL to change design
on numerous occasions
 Delay in safety certifications from RDSO
and Fire department
 Effects of delay:
 MMOPL asking for steep increase in the
fare creating a controversy in the media
and asking for reimbursements for
expenses
 8 year delay and harassments for
Mumbai commuters on the affected
stretch

19. ₹ 45.00
₹ 40.00
₹ 35.00
₹ 30.00
₹ 25.00
₹ 20.00
₹ 15.00
₹ 10.00
₹ 5.00
₹ 0.00
Pricing Comparison
0-2 2 -4 4 - 6 6 - 9 9 - 12 12 - 15 15 - 18 18 - 21 21 - 2424 - 27 27 - 31 31 - 3535 - 3939 - 44 > 44
Mumbai (Proposed)
Delhi
Bangalore
Chennai
350
250
400
240
325
200
Mumbai (elevated) Delhi (elevated) Delhi (Underground) Bangalore (elevated) Bangalore
(Underground)
chennai (elevated)
Cost Per Kilometre (Rs Crores)
PRICING

20. Comparison with other metros
Parameters Other Metro Mumbai Metro
Financial Viability Among 200 metro cities
– Hong Kong,
Singapore, Tokyo, Taipei
have been financially
viable
Very early to predict
Cost Escalations It can happen because
of delays in clearance
From 2346 Crores to 4200
Crores
Source of Revenue Ticket sales,
Advertisements
5 – 10 % Ticket Sales
Advertisement, Station
naming rights
Fare Low as compared to
other modes of
transport
Very high compared to
other metros in India
Pricing Authority Government in most of
the projects
MMOPL *
The project, which was under the Indian Tramways Act, was brought by the union government under
the Indian Metro Act in 2014, allowed MMOPL to fix its own fare structure in the absence of a fare
fixation committee

21. Learnings & Recommendations
1. Expediting the bid process
 Entire bid process to choose the successful bidder took more than 2 years. This led to very
less no. of bidders bidding for the project.
2. Delay in obtaining VGF approval
 Substantial delay in obtaining VGF approval from the govt. because model concession
agreement was not in place.
3. Delay in getting approval
 Delay in getting approval for construction of over-bridge that passed over the railway line.
This was because railways were thinking of a project that could invade the path of the metro
line.
 It is recommended that authorities be cognizant of all other upcoming infrastructure projects
that have the potential to affect operations of the planned project while bidding out such
projects and resolve the same prior to the appointment of a developer.

22. Learnings & Recommendations
4. Land acquisition issues
 Land for the depot was under dispute.
 It is recommended in the future concerns such as these are addressed
before the project procurement stage itself to ensure smooth functioning of
the project.
5. Clear specification on Asset transfer on termination
 5 years before the expiry of the concession period a survey of the assets would be
carried out to determine whether they are in working condition as given in the
agreement. Schedule in the concession agreement does not have clear and robust
specifications. Risk of a difference of opinion between the concessionaire and the
government and this can potentially lead to a dispute.
 The government could manage this better by incorporating clear and robust
specifications on the condition it would want the assets to be handed over to the
government.
 Risk allocation has to be equitable; Tendency to pass on maximum risk to the
Concessionaire will prove counter productive.

23. References
http://timesofindia.indiatimes.com/city/mumbai/Metro-phase-III-tenders-to-be-issued-by-July-
2013/articleshow/32677654.cms
http://en.wikipedia.org/wiki/Line_3_(Mumbai_Metro)
https://mmrda.maharashtra.gov.in/home
http://articles.economictimes.indiatimes.com/2014-07-31/news/52285190_1_mthl-santa-cruz-chembur-link-road-sclr
http://toolkit.pppinindia.com/water-sanitation/module3-rocs-mm1.php?links=mm1
http://indiatogether.org/metro-fares-in-mumbai-and-other-cities-economy
http://www.mumbaimirror.com/mumbai/others/Mumbais-Metro-fare-is-double-that-of-other-cities-
MMRDA/articleshow/36318428.cms

24. Thank you
Q&A