The PPP model case study of Mumbai Metro.

1. PUBLIC-PRIVATE PARTNERSHIP
PROJECT CASE STUDY ON
MUMBAI METRO

3. LINE 1 MUMBAI METRO OVERVIEW
Location- Mumbai, Maharashtra.
Terminal- Versova, Ghatkopar
Stations- 12
Operator- MOOPL
Rolling Stock- CSSR Puzhen
Daily Ridership- 4 lacs

4. PROJECT DESCRIPTION
• Government of Maharashtra (GOM) through the Mumbai
metropolitan region development authority (MMRDA) as
planned 146km long rail based Mass Rapid transit system
(MRTS)
• 1st corridor of the project is from the Versova Andheri
Ghatkopar line shall be elevated with root length of 11km with
12 stations in the car depot at D.N nagar
• Minimum curvature of line shall be 100mters and minimum
ground clearance 5.5 meters.

5. ● The existing sub uran train connects north and south Bombay where as
this project provides connectivity between East - West rail to central
nad western suburbs
● Total time taken would be 21mins where as other modes of transport
takes 90mins
● Mumbai Metro runs On a elevator couridor which is full air
conditioner world class coaches, elevator and escalator at station,
automatic fare collection system and high level security system.

6. PPP STRUCTURE
• This project is a BOOT basis for a 35 years including construction
period of 5 years awarded by MMRDA. Under the construction
aggreement the concessionaire as to design , finance, construct,
operate, own and maintain the first corider and transfer the owner
ship and assets at the end of concession period.
• SVP named Mumbai Metro One Private Limited(MMOPL) formed
with reliance energy limited, veolia transport and and MMRDA.

7. FINANCING INFORMATION
• The total estimation of the project was 2356 crores
• The project was financed on the basis of viability grant by
GOI( 20%-470 crores) and GOM (7.5%- 180crores).
• The financing pattern was 70% debt and 30% equity. MMRDA
and private operator contributed 466 crores.
• The consortium banks are IDBI, Karur Vysya Bank, Canara
Bank, Indian Bank and Oriental bank of Commerce.
Viability Grant- a capital grant or subsidy or equity from
the Central or State Governments to render a Public
Private Partnership (PPP) project financially viable and
bankable.

8. Viability Gap Funding 650
Debt 1240
Equity 466
Total 256
The cost of borrowing for the rupee component, which constitutes
about 75 per cent of the total debt, the foreign currency loan will be at
3.5 per cent above LIBOR(London Inter-Bank Offered Rate).
Particulars With VGF Support
Project IRR 8%
Equity IRR 15%
Debt equity Ratio 70:30
IRR- Internal Rate of Return

9. •First
conceptuali
zed in 1997
INCEPTION
•Feasbility
study in
1997-2000
FEASIBILITY •Bids Invited in
August 2004
and successful
bidder chosen
in May 2006
PROCUREMENT
Development
commenced in
2008
DEVELOPMENT
• Ghatkopar-
Versova-
Andheri line
was delivered
in June 2014
DELIVERY
Concession
Period end.
EXIT

10. PROCESS ANALYSIS
Conceptualization and Feasibility
On exploring the viability of various mass transit that are efficient,
economical and environmentally friendly.
A feasibility report carried out under Indo-German Technical Co-
operation with consultancy work with TEWET in association with
DE-Consult and TCS during 1997-2000.
Study recommended Andheri-Ghatkopar was potentially
bankable and economically viable.

11. Procurement
The project was approved by the GoM in August 2004 global bids were Invited
through an Expression of Interest (EoI).
The bid process conducted a two stage bid-process, i.e. technical and financial
stage.
Technical bids were invited for the project in May 2005
• Hindustan Construction Company and RITES
• Reliance Energy Limited and Connex-France
• Shaktikumar Sacheti Limited and Lingkaran Metro
• Siemens, L&T, Gammon, BEML
• IL&FS and ITD Thailand and Unity Infraprojects

12. The consortia which qualified to submit financial proposals were:
a. Reliance Energy Limited and Connex-France
b. Siemens, L&T, Gammon, BEML
c. IL&FS and ITD Thailand and Unity Infraprojects
• Financial approvals were submitted in January 2006 only by Reliance
Energy and Connex France. Only the lowest of Financial bidder were
awarded consortium. The talks went from February to May 2006.
• REL-led consortium negotiated equity IRR of 26% to 15%. The VGF
was brought down to 650crores.
• VGF application submitted to GoM in June 2006 after successful
bidder is chosen
• The project was delayed obtaining Viability gap fund because it was
funded before model concession agreement(MCA).
MCA spells out the policy and regulatory framework
for implementation of a PPP project.

13. • The issue was finally resolved by grant of VGF in the form of a special
one time grant given to the state. The GoI agreed to give a special
grant of 20% of the project cost.
• The GoM approved a grant of 7.5% of project cost. The formal
approval for VGF of 650 crores was obtained much later by January
2009.

14. Development
The development phase of the project was initiated in parallel to the VGF
approval process.
Milestone achieved are,
 The SPV was incorporated in December 2006.
 The Engineering and Project Management Consultants,a consortium
of Parsons Brinkerhoff (USA) and Systra SA (France) joined the team
on February 14, 2007
 Signing of the Concession Agreement and Shareholders agreement
took place on March 7, 2007

15.  MMOPL and Government of Maharashtra entered the State Support
Agreement on April 20, 2007
 Construction commenced on February 8, 2008
 Financial Closure for the project completed on October 3, 2008

16. Pre-operative
risks
Risk
Period
Primary
Risk Bearer
Delay in Land
Acquisition
0-5
years
Government
Financing Risk 0-5
years
Private
sector
Planning 0-5
years
Private
sector
Regulatory,
Administrative and
approval delay.
0-5
years
Private
sector
RISK ALLOCATION FRAMEWORK
Sensitivity

17. Construction
phase Risk
Risk Period Primary Risk
Bearer
Design Risk 0-5 years Private Sector
Construction
Risk
0-5 years Private Sector
Change in scope
Risk
0-5 years Government
Financing Risk 0-5 years Private Sector
Sensitivity

18. Operational
Phase Risk
Risk
Period
Primary Risk Bearer
Technology
Risk
0-35 years Private
Sector/Government
Operational
and
Maintenance
Risk
0-35 years Private Sector
Market Risk 0-30 years Private Sector
Performance
Risk
0-30 years Private Sector
Sensitivity

19. Handover Risk Risk Period Risk Bearer
Handover Risk 35th year Private
Sector
Private Operator
event of default
0-35 years Private
Sector
MMRDA Event
of default
0-35 years Government
Sensitivity

20. Other Risk Risk Period Risk Bearer
Interface Risk
(with other
metro
corridors)
Through out Private Sector
Force Majeure Through out Shared(Depend
ing on the type
of Event)
Change in Law
Risk
Through out Private Sector
Sensitivity

21. POST FACTO VfM ANALYSIS
• A VfM analysis for the project has not been undertaken in the Feasibility
Study.
• The quantitative analysis to assess VfM will not be practical for this project.
• It has been achieved by the private operator based on publicly available
information and discussions with officials working on the project has been
attempted.
• Reduction in financial burden on the state budget, PPP project was structured
to ensure that it was viable by providing a viability gap funding for the
project.
• The financial bid parameter was the lowest viability gap quoted.
VfM- A measure of quality that assesses the monetary cost of the product or service against the quality and/or benefits of that product or service, taking
into account subjective factors such as fitness for purpose, along with whole-of-life costs such as installation, training, maintenance and disposal, and
wastage.

22. • The lowest financial bid quoted was viability gap funding of 1250 crores
which was reduced after negotiations to 650 crores.
• This is estimated to be around 50-60 crores. The total taxes estimated for the
project are around 300 crores.
• Thus, effectively the government would end up with a net spending of ` 400
crores and the city would get access to an asset worth 2300 crores.
• The construction and operations of a critical infrastructure facility for a
period of 30 years with a reduced requirement of upfront money.
• Substantial risk transfer,The private sector has undertaken substantial
project risks, such as financing, construction, operations and traffic/ revenue
risks.

23. DISCUSSIONAND CONCLUSION
• Mumbai’s metro network will span across 357 kilometres and 14 lines with
more than 220 stations, but it is not the silver bullet that will solve commuter
woes.
• Importance of MM, The metro will provide for the first time connectivity to
airport, Nariman Point, Cuffe Parade, Kalbadevi, Worli, BKC, Airport,
SEEPZ and MIDC. Besides, two important heritage stations of Mumbai i.e.
CSTM and Church gate will also get joined through MML-3 alignment
• Fadnavis announced on 8 April 2017 that the government was considering a
circular metro loop line along the Kalyan-Dombivli-Taloja route. The
proposed 15 km line would link Kalyan and Shil Phata with 13 stations, bring
metro connectivity to Kalyan East, Dombivli, Ambernath and Diva.

24. • The Mumbai Metro resumed services for general public on 19 October 2020,
after being shut down since March 2020 due to the COVID-19 pandamic
Summary
• The project brings number of benefits and opportunities to the city a safe,
efficient, comfortable and state of art modern Metro system direct
connectivity to important destinations
• Environmental benefits leading to better quality of lifeEconomy benefit
(EIRR 17.93%, FIRR 2.17%)Employment and Business opportunities as Rs
23,136 Crores investments will be made in the project within 5 years

25. KEY LEARNING
1. Expediting the bid process is critical to ensuring a good response to the
proposal
2. Delay in obtaining VGF approval
3. Delay in approvals can potentially derail the project
4. Land Acquisition process can lead to issues in the project
5. Clear Specifications on Asset Transfer on termination
6. Public Support for the project
7. Role of Good Project Preparation