7 October, 2017
Cabinet Approves New Metro Rail Policy
The Union Cabinet chaired by Prime Minister Shri Narendra Modi approved the New Metro Rail Policy.
The policy opens a big window for private investments across a range of metro operations making PPP component mandatory for availing central assistance for new metro projects. Private investment and other innovative forms of financing of metro projects have been made compulsory to meet the huge resource demand for capital intensive high capacity metro projects.
Seeking to ensure that least cost mass transit mode is selected for public transport, the new policy mandates Alternate Analysis, requiring evaluation of other modes of mass transit like BRTS (Bus Rapid Transit System), Light Rail Transit, Tramways, Metro Rail and Regional Rail in terms of demand, capacity, cost and ease of implementation. Setting up of Urban Metropolitan Transport Authority (UMTA) has been made mandatory which is to prepare Comprehensive Mobility Plans for cities for ensuring complete multi-modal integration for optimal utilization of capacities.
The new Metro Rail Policy provides for rigorous assessment of new metro proposals and proposes an independent third party assessment by agencies to be identified by the Government like the Institute of Urban Transport and other such Centres of Excellence whose capacities would be augmented, as required in this regard.
Taking note of substantial social, economic and environmental gains of metro projects, the Policy stipulated a shift from the present ‘Financial Internal Rate of Return of 8%’ to ‘Economic Internal Rate of Return of 14%’ for approving metro projects, in line with global practices.
Metro Rail Policy puts States in the Drivers’ Seat
The New Metro Rail Policy empowers states, but also puts an obligation on them to expand project viability, by promoting transit-oriented development (TOD) and aligning it with real estate development, strengthening last-mile connectivity; and attracting private investments through the Public Private Partnership (PPP) model.
The policy provides for rigorous evaluation of new metro proposals, including alternate transit mode analysis to ensure
that the least-cost and most-efficient mass transit mode is selected for public transport. Further, it also proposes an independent third-party assessment of proposals by government identified agencies.
The new policy further plans to authorize states to regulate and set up a Fare-Fixation Authority as well as encouraging other non-fare revenues such as advertisements, lease of space etc.
Also there are provisions to raise resources using innovative mechanisms like ‘Betterment Levy’ on nearby assets, issuance of corporate bonds etc. and improving last-mile connectivity for a catchment area of nearly 5 km, to promote metro ridership. The new policy has made it mandatory to have a PPP component either in whole or part of the project to be eligible for availing central financial assistance for new metro projects.
Central PSUs investing in Odisha’s Solar Park Programme
Odisha's solar power plans have received a shot in the arm with several central public sector undertakings (PSUs) expressing their interest in participating in the state’s solar park programme.
Till now, NTPC, NLC (formerly Neyveli Lignite Ltd), North Eastern Electric Power Corporation Ltd (NEEPCO) and the Mini-Ratna PSU SJVN Ltd, have demonstrated their interest in being a part of the programme.
The govt. on it’s part has provided an in-principle clearance for another 250-MW solar power project proposed by NLC at a cost of Rs 4.5 crore per megawatt.
Further, it recently approved a plan by NEEPCO to invest Rs 944.85 crore in Odisha to set up a 200-MW solar power plant. The proposed unit is scheduled to start operations in December 2019.
For further information, please contact:
Vineet Aneja, Partner, Clasis Law
vineet.aneja@clasislaw.com
