Kerala Government drops PPP model for light rail project

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Kerala Government drops PPP model for light rail project

The government of Kerala has rejected a proposal from the Delhi Metro Rail Corporation Ltd (DMRC) to carry out the Thiruvananthapuram Light Metro project though a hybrid PPP model.

Under this decision there would not be any private sector participation in the project, which would be financed instead by the government and through a loan from the Japan International Co-operation Agency (JICA).

In April, after the government rejected a pure PPP model for the project DMRC proposed to combine direct investment for some of the project components and a PPP model for the rest. Under the hybrid scheme Kerala Monorail Corporation Ltd (KMCL) would have invested in land acquisition, alignment and formation, R&R package, utilities, security and multi-model traffic integration, while the depot, traction, signalling system and rolling stock could have been combined and tendered through a PPP model.

At that time the finance secretary of Kerala K M Abraham commented that it would be difficult to find investors for the project due to the low project's financial internal rate of returns (FIRR), which was 2.07% and 8.02%, without and with property development respectively.

According to DMRC principal adviser E Sreedharan, the PPP model was not suitable to develop the project. In addition, he said that the PPP model had failed to take off in several of the metro projects nationally, including Phase-II of the Delhi metro.

The Thiruvananthapuram line will start from Technocity and terminate at Karamana covering a distance of 23 km with 19 stations, along the old NH 47.

The line would involves the development of three routes:

  • Route 1 covers a distance of 7 km from Technocity to Kariavattom.
  • Route 2 covers a distance of 8 km from Kariavattom to Kesavadasapuram.
  • Route 3 covers a distance of 8 km from Kesavadasapuram to Karamana.

The total project investment, based on April 2012 prices, is estimated at Rs27 billion (US$423 million) excluding taxes of Rs4.75 billion (US$74.4 million).

Thiruvananthapuram, also known as Trivandrum, is the capital of the Indian state of Kerala the largest and the most populous city in kerala and the headquarters of the Thiruvananthapuram District.

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