[lbo-talk] 'Delhi can`t do without a metro`

[uvj at vsnl.com]

Business Standard

Friday,Oct 20,2006

`Delhi can`t do without a metro`
http://www.business-standard.com/opinionanalysis/storypage.php?tab=r&autono=262352&subLeft=2&leftnm=4

Q&A: E Sreedharan

Sunil Jain / New Delhi October 20, 2006

With the Delhi government readying for introducing a Bus Rapid Transport
System (BRTS), Sunil Jain spoke to Delhi Metro Rail Corporation (DMRC)
Managing Director E Sreedharan on the comparison between a BRTS and a metro,
on the metro slipping behind its targets, and its expansion plans. Excerpts:

The Phase II targets are steep. You did 65 km in seven years in Phase I, now
you'll do 117 km in 3.5 years.

Yes, nowhere in world has such a target been set, but we can do it. We had
three chief project managers for Phase I, we'll have seven for Phase II. The
problem we're anticipating is getting rolling stock - we need 400 coaches
and have told foreign firms they have to make around 80 locally. For the
19.5 km airport stretch, we'll do only the civil works, the rest will be
done by private firms on a turnkey basis.

Your losses in 2004-05 were Rs 76 crore. What's the figure for 2005-06?

We've got a profit of Rs 85 crore after depreciation and interest. PBDIT is
Rs 347 crore in 2005-06 as compared to Rs 20 crore in 2004-05. Farebox
collections have risen from Rs 54 crore to Rs 113 crore. The 2005-06
numbers, of course, look better due to extra front-ended property
development income of Rs 296 crore (property development income in 2004-05
was Rs 6 crore).

On an apples-to-apples basis?

We'll be minus after depreciation and interest. We've never said the metro
will make profit, but we've said we will not require any subsidy, we'll make
all repayments and interest out of our earnings. Only four of 135 metros in
the world make operational profits and we're one of them - no one can
provide for depreciation charges.

Phase I costs have more or less doubled from the original Rs 5,500-odd
crore.

The initial Phase I cost was at the April 1996 cost and was confined to 55.3
km only. Phase I today covers 65 km and includes the latest technology such
as the Automatic Fare Collection system, extra escalators for public
convenience and modern trains. Taking into account inflation, the Phase I
cost of Rs 10,571 crore was within the estimates.

You're way behind on your ridership. The metro was originally supposed to
carry 21.8 lakh passengers a day by 2005. Today, your website talks of 15
lakh in 2005 and the actual achievement is around 5 lakh.

The original estimates were prepared by RITES, not by us. It assumed new
colonies coming up, land use changes which never happened (this would have
increased density), it assumed every station would have high density feeder
buses so that passengers would enjoy better connectivity. RITES assumed bus
fares would go up, so ours could go up as well. We assumed our fares would
be 1.5 times that of bus fares, but today bus fares are around a fourth of
ours in spite of losses being incurred by them which are covered through
subsidies. The DMRC, on the other hand, runs without subsidies.

Still, you're behind your own 15 lakh target for the year 2005.

The RITES report prepared in November 2001 on the impact of feeder bus
services on the Delhi Metro estimated 15 lakh ridership for Phase I but also
said that this would be reduced to a third if a dedicated, complete and
professional feeder network for the metro was not provided. At present we
are carrying 4.75 lakh passengers which is thus according to estimates.

What is the new target?

This 15 lakh target was for the Phase I section of 65 km in 2011, not 2005
(following the interview, the DMRC site reflects these new numbers). The
total Phase I and II ridership by 2011 will be 26 lakh.

Professor Dinesh Mohan of IIT Delhi says you cater to just 4-5 per cent of
Delhi's ridership, and this means an annual subsidy of around Rs 35,000 per
passenger!

You can't calculate the ridership or subsidy while the network is
incomplete. We are around 4 per cent of Delhi's ridership today; by the end
of Phase II, we'll have about 10 per cent of the ridership; and by the end
of Phase IV, when we're 350 km long, we'll get 25-30 per cent of the city's
ridership. This is the normal ridership for most metros. A third of
commuters in any place may be pedestrians and so you should leave them out.

But extending the metro to 350 km will hugely add to costs. Phase II alone
will cost Rs 18,000 crore. The BRTS Mohan talks of costs a 10th the metro
does and can carry as many passengers .

Those figures don't reflect the true costs. It doesn't take into account the
costs of the road - the BRTS will take up two lanes in the middle of the
road, so at some point, existing roads will have to be widened. The metro,
by contrast, doesn't take up the road since it is largely underground. Where
we are elevated, we're on columns in the central median and hardly take up
any part of the road - in just two places have we taken 300 metres of the
road for the ramp. Take all this into account, and the BRTS costs will go up
several times. In any case, the BRTS has done well in cities where a
provision was made for it before a city was built as putting it in place
after a city has come up is completely different. The BRTS will require even
operational subsidy which the metro doesn't require.

It is not possible to run buses with less than 30 seconds in between them
(though the actual will be around 2-3 minutes), so you can run a maximum of
120 buses an hour, or 12,000 persons per hour. Our capacity is 90,000
persons per hour. The real issue is whether Delhi can survive without a
metro, not its profits or losses.

We've carried 230 million passengers since we began without a single
fatality. The energy efficiency of a metro is also much higher (about five
times more than a road-based system). Once you take pollution and accident
levels coming down due to it and the time saved due to traffic snarls coming
down, the metro has an economic return of 24 per cent, that is, it recovers
its full cost in four and a half years.

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