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Srinagar Metro Project: Another white elephant in the making?

7 February 2020

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Ziraat Times Research Team

Jammu & Kashmir Administrative Council (SAC) on February 6 gave its nod for the Detailed Project Report (DPR) of metro rail projects in Srinagar and Jammu cities to be forwarded to union government for funding approval.

The two projects, technically referred to as ‘Mass Rapid Transit Corridor’ for Srinagar and Jammu cities were initially estimated to cost Rs 20,000 crore. Now, the final DPR pegs the estimated cost at Rs 10, 559 crore.

In June, 2019, at the time of the first survey of the Srinagar project, Ziraat Times in an in-depth investigative report analysed the critical issues related to the project and engaged with subject experts on questions of financial viability, technical expertise, project management capacity and the inherent operational limitations of J&K’s administrative systems in undertaking such a big project.

Today, as the project goes to look for potential financiers, we look at the following questions:

1. Is Srinagar Metro – considering its huge cost – economically viable? Has a comprehensive cost-benefit analysis, factoring in the views of the people of the city, been done?
2. Can Srinagar, and Kashmir, as a whole, afford the disruption to normal life and business in case the project stretches to over a decade?
3. The project is going to be built on a loan. Will it generate enough revenue for J&K state to repay the loan with acceptable repayment period and interest?
4. Metro projects are known to be viable for cities with population not less than 4 million. Will Srinagar metro have the critical mass of users considering that city population is about 1.5 million?

Why no stakeholder consultations on Srinagar metro?

Improved urban transportation in Srinagar and Jammu is indeed critical. The planned Srinagar Rapid Transit Transport System seems to be conceived in hurry. Top local and civil society leaders told Ziraat Times that there are several sustainability issues, and also the methodology of design, that need a broader civil society debate. “It is not a good practice for a feasibility analysis company to undertake a feasibility assessment exercise without engaging in credible and broad-based social consultation process”, they maintain.

Lately, several development projects in Jammu and Kashmir have been designed devoid of necessary consultations with the critical actors of the economic social and the political system. A number of such projects today are no better than the proverbial white elephants. Such development planning requires a serious rethinking.

Is the Srinagar project financially viable?

It is fundamental for any developmental project designed to generate revenue for sustainability reasons to clearly demonstrate financial sustainability.

There are ample feasibility studies that establish that such costly transportation system could be financially viable for cities with a population over 4 million. Srinagar’s urban conglomeration consists of a population not more than 1.5 million. Even if we were to add a floating population of 500,000, the critical mass of potential users for this planned metro system does not seem to reach the desired level.

Same is the case with the proposed Jammu project.

The mode of finance for the Srinagar rapid transit system is not clear as yet. Who is going to fund it? Does the union government have that fiscal space available today to fund the project, irrespective of its financial viability? The answer is big ‘no’.

An official statement released on February 6 suggests that the union government is open to both internal and external financing. In other words, financial resources for this project would have to come from internal or foreign lenders, which would come with certain interest obligation and other conditionalities.

Under these circumstances, it is difficult to imagine which financiers would be willing to throw their hats in the ring. And if at all there are willing financiers, how this project would raise the necessary revenue to cover not only the operational costs but also the resources required for the loan repayment is highly unclear.

Srinagar Master Plan 2035 recommendations

On Public Transport Systems, Srinagar Master Plan 2035 has accorded first priority to High Capacity Bus System. The second priority has been given to Bus Rapid Transit System and third priority to Mass Rapid Transit System.

Interestingly, the first two priorities are being by-passed in creating a financially-questionable Mass Rapid Transit System.

The initial feasibility surveys conducted for the Srinagar project indicates that only 12% of the planned total trips are more than 10 km. As per the Comprehensive Mobility Plan (CMP), the recommended Passengers Per Hour Per Direction (PPHPDT) for having a Metro system is 30,000 and above. The maximum passenger demand is 9,100 – 14,400 PPHPDT on high capacity corridors for which Metro will be inefficient and very expensive. Also, 12% trips are too few to be considered for a high capacity metro rail system for the city.

The project cost

Rail India Technical and Economic Service (RITES) was entrusted with the development of a Detailed Project Report (DPR) for Srinagar and Jammu metros in April 2017. The DPR was expected to be ready by September, 2017, but, in reality, the project report could be readied only in 2020.

Interestingly, while in 2017, the Srinagar metro project was estimated to cost Rs 15881 crore, the total project cost for both Srinagar and Jammu projects is now pegged at Rs 10,559 crore.

Moreover, such a big delay in the preparation of the DPR raises questions over the technical expertise of the company planning to undertake such a big project in first place in Jammu & Kashmir.

Have the risks and assumptions been rationally thought through?
The envisaged construction period and the project management system for Srinagar metro project must be guided by certain risks and assumptions. Given the history of project completion in J&K, especially in Kashmir division, and the cost overruns, for the proposed 4-year project period for the Srinagar metro it is not clear if the DPR has fully factored in the project management deficiencies and the cycle of project inception, funds released, funds disbursement, project progress evaluation, multi agency coordination mechanisms and so on and so forth.

Importantly, the company preparing the DPR has not demonstrated to stakeholders what learning it has drawn from other projects in Kashmir that have experienced cost and time overruns.