Hugely inflated ridership estimates along the 11.6-km stretch of Gurgaon’s Rapid Metro, award of the project to lone bidder, a concession agreement allegedly skewed in favour of private companies, and undue accrual of benefits to real estate players in the process, have now left the Haryana government staring at the prospect of taking over the entire liabilities of Rs 3,771 crore.
Official records accessed by The Indian Express show that the Rapid Metro project’s origin traces back to a 2007 proposal by DLF group. Without much skin in the game barring a token stake, DLF, as well as other real estate players, gained in terms of increased Floor Area Ratio (FAR) granted by the state, and also rising prices of property in the metro’s vicinity.
The project was undertaken in two phases: The initial 5.1-km stretch was awarded in July 2009 to a sole bidder Rapid MetroRail Gurgaon Ltd, a special purpose vehicle floated by IL&FS and DLF-promoted firms and executed at a cost of Rs 1,088 crore; and the second 6.5-km stretch proposed by RMGL and again allotted in October 2012 to a single bidder Rapid MetroRail Gurgaon South Ltd, another SPV promoted by IL&FS group firms, at a cost of Rs 2,143 crore.
PPPs in Metro Rail projects have been fraught with problems since they are capital intensive, have long gestation and offer low returns. The private sector’s deals with a state agency and poor oversight added to Gurgaon Metro’s woes, now requiring the state to fully foot the bill.
In its original proposal, DLF estimated the average daily ridership for the 5.1-km stretch – from Sikanderpur Metro Station on DMRC Yellow Line to its properties running through DLF Phase II, Phase III and Cybercity – at approximately 2 lakh in 2015 and 2.6 lakh in 2021. The numbers were bumped up in the detailed project report (DPR) prepared by RMGL to 3,11,246 in 2015 and 3,72,560 in 2020. The first phase started commercial operations in November 2013.
Similarly, for the 6.5-km stretch, from Sikanderpur Metro Station to Sector 56, passing through big projects — Aralias, Magnolias, DLF Belaire, Florence Marvell, Palm Springs, Emaar MG — RMGL’s feasibility report in May 2011 estimated average daily ridership at 147,150 in 2015 and 167,400 in 2020. At the DPR stage, this was hiked further by the sole bidder RMGSL to 222,450 in 2015 and 266,630 in 2020. This route became operational on March 31, 2017.
While the two phases cumulatively estimated a daily ridership of over 6 lakh, the actual ridership is less than a tenth at about 55,000.
Describing this mis-representation of traffic, one-sided concession agreement, and awarding of projects to single-bidder consortia as a “quintessential crony capitalist public-loss, private-gain model of running business”, IAS officer Ashok Khemka, Principal Secretary, Science and Technology, has now drawn the attention of Chief Minister Manohar Lal Khattar in a letter and accused Haryana Shahari Vikas Pradhikaran (HSVP, earlier HUDA) and the concessionaire companies of indulging in “shadow boxing”.
In the letter sent last month, calling it a “sweetheart deal between DLF and IL&FS and State of Haryana and the Banks”, Khemka urged the government to “pierce the corporate veil” and hold the concessionaire liable for “terminating the contract”. In his letter, he said IL&FS and DLF must be asked to honour the contract and “pay all amounts and share of non-fare revenues under the agreement in lieu of free land and right of way”.
After RMGL sent a notice to the state government on June 7 stating it would be unable to run the metro for 90 days, HSVP approached the Punjab and Haryana High Court, which asked the IL&FS-promoted SPV to continue operations till October 16. The project, as per the concession agreement, will be the responsibility of HSVP in case of a default leading to a termination of the metro’s operations.
Simultaneously, ruling on a dispute over sharing of liabilities, the Court on September 20 asked two retired judges to oversee a smooth takeover of the project by HSVP, and asked the Comptroller and Auditor General to undertake a thorough audit of the project within 30 days.
Responding to the questionnaire sent by The Indian Express, IL&FS said, “We would not like to comment on specific ridership numbers. However, ridership studies formed a part of the RFP/RFQ document issued by the Authority for the bidding process. These studies were based on multiple factors involving overall infrastructure development including development of feeder routes, allocation of parking at station, comprehensive mobility plan, multi-modal access, pedestrian pathways and integrated traffic policy framework. Absence of some/ all such development by State had huge impact on ridership.”
DLF did not respond to the questionnaire sent to it. A senior executive, who did not wish to be named said, “It (the metro) has run successfully for half a dozen years and more. Government should have given the same concessions that it gave to Delhi Metro when it came to Haryana.”
A senior Haryana government officer, privy to the developments in the case said, the state was keen that DMRC run Gurgaon metro too. “Rest will be decided after the forensic audit. It is not our default, it is the default on part of the concessionaire. We are raising several aspects. Lots of loans were taken that were diverted. We shall only know after a thorough audit,” said the officer.
When contacted, former DMRC chief E. Sreedharan said as DMRC chief then, he was against the projections. “I had also questioned the projections at that time. But they (consortium) were very very hopeful (of achieving) what they had (projected). DMRC had no hand at all in this, except that we operated with them for the common station work.”
Sreedharan added: “For whatever it is, the metro is running. We cannot throw it away. I think Haryana government has to take it over. But the government will also not be able to run it. I think, they will have to hand it over to DMRC to run it. DMRC will also take over only on certain conditions. Anyways, it is a public asset, a social necessity. About who will bear the penalty, is a matter of settlement or further probe,” he said.