Detailed Project Report for Rail Based Mass Transit System in Varanasi Final Report CHAPTER 13: COST ESTIMATES AND FINANCIALS

1133.. CCOOSSTT EESSTTIIMMAATTEESS AANNDD FFIINNAANNCCIIAALLSS

13.1 CAPITAL COSTS

13.1.1 Coverage Cost estimate for Varanasi Metro corridors (Corridor‐I from BHEL to BHU and Corridor‐II from Benia Bagh) has been prepared covering civil, electrical, signaling and telecommunications works, rolling stock, environmental protection, rehabilitation, etc. at Jan’ 2016 price level.

While preparing the capital cost estimates, various items have generally been grouped under three major heads on the basis of (i) Route km length of alignment, (ii) Number of units of that item and (iii) Item being an independent entity. All items related with alignment, construction, permanent way, Third Rail, Signaling & Telecommunication, whether in main lines or in maintenance depot, have been estimated at rate per Route km/km basis.

Cost of station structures, other electrical services at these stations and Automatic Fare Collection (AFC) installations at all stations have been assessed in terms of each station as a unit. Similarly, for items like Rolling stock costs have been estimated in terms of number of units required for each item. In remaining items, viz. land, utility diversions, rehabilitation, etc. the costs have been assessed on the basis of each item, taken as an independent entity.

In order to arrive at realistic cost of various items, costs have been assessed on the basis of recently awarded rates of Lucknow Metro, DPRs of DMRC Ph‐IV, Lucknow and other various Metros and suitable escalation factor has been applied to bring these costs to Jan’ 2016 price level.

Basic cost is exclusive of various taxes and duties viz. custom duty, excise duty, Sale tax, VAT etc. and details of taxes and duties are worked out separately. Current rates of various taxes and duties have been taken into consideration and taxes / duties have been applied as per prevalent practice of DMRC.

13.1.2 Land Requirement a) Finalization of alignment, location of stations, entry / exits etc. has been done with the objective of keeping land requirement to the bare minimum. For this purpose, alignment, stations, depots, parking and Property Development (PD) have been planned in the State Government land unless and until it becomes unavoidable to plan these facilities in Central Government land or private land. Common Depot for both Corridor‐I & Corridor‐II has

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been planned in the Non‐agricultural land of Ganeshpur area (Private land). As Varanasi city is very congested, most part of both the corridors is planned underground and stations are proposed in open land. The summary of land requirement for Corridor ‐ I & II is as under :‐

TABLE 13.1: LAND & STRUCTURES REQUIREMENT (IN HECTARES) FOR CORRIDOR‐I Permanent Temporary Structures Ownership Purpose Land Land (Floor area) Central Govt Alignment, Station etc 0.07 0.40 0.05 (Northern Railway) State Govt Alignment, Station etc 1 2.6 0.2633

Alignment, Station etc 1.05 2.5 0.52 13.2 0.5 Depot (Ganeshpur) 0

Private Casting Yard 0 6 0

RSS 0.3 0 0

Total 14.55 8.5 1.02

TABLE 13.2: LAND & STRUCTURES REQUIREMENT (IN HECTARES) FOR CORRIDOR‐II Permanent Temporary Structures Ownership Purpose Land Land (Floor area) Central Govt Alignment, Station etc 0.14 0 0.0242

Alignment, Station etc 0.8 2.1 0.105

State Govt RSS 0.3 0 0

Total 1.1 2.1 0.105

Alignment, Station etc 0.13 0 0.18

Private Casting yard 0 4 0

Total 0.13 4 0.18

b) The land area for piers of elevated alignment, elevated stations falling over the existing road and entry/exit falling on road / State Government land has not been accounted for in the land requirement and costing as present land use is not getting affected by these facilities. Land requirement for other metro utilities like ramp, off the road elevated stations, depot, RSS, ancillary buildings etc. have been accounted as far as per details in subsequent paras.

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c) Rate of Central Govt. land (Northern Railway at Varanasi Cantt for Corridor‐1 and Post office at Sarnath for Corridor‐2), required on permanent basis has been taken as Per Circle rates ‐ 01st Aug'15, published by Collectorate, Varanasi. No solatium has been applied to the basic land cost. Cost of Passenger Reservation System (PRS) at Varanasi Cantt. including cost of structure, electrical and S&T items, terminals etc has been taken as Rs. 3.0 crores as per discussion with CRIS. d) Rate of Central Govt. land (Northern Railway at Varanasi Cantt), required on temporary basis for 3 years construction period, has been taken @ 6% Per annum of Circle rates ‐ 01st Aug'15, published by Collectorate, Varanasi. No solatium has been applied to the basic land cost.

e) Rate of State Govt. Land required on permanent basis has been taken from DPR for Lucknow Metro with updation. No solatium has been applied to the basic land cost. In case, State Govt. is in a position to provide its land free of cost or at reduced rates, it will further improve the financial statistics of the project.

f) Cost of structures for rehabilitation of squatters at Tulsi Manas Mandir has been taken as Rs. 25 crore per Hectare. Rehabilitation of squatters is required as per norms of International Funding Agencies.

g) Rate of Private land & non commercial structures has been taken from Circle rates ‐ 01st Aug'15, published by Collectorate. Above this, 100% solatium has been applied as per LARRA. No administrative cost is added towards land acquisition activities, as it is understood that this activity shall be carried out by State Govt. from its own resources.

h) On lines with DPR for Kanpur MRTS, efforts have been made to provide parking for maximum possible stations. To make the project financially viable, property development has been proposed on suitable land pieces on preliminary stage. Moreover, in line with DPR for Lucknow Metro, cost of land towards parking cum PD is not loaded to the cost estimates and this cost will be borne by State Govt. separately. Details of land required for parking cum PD is mentioned separately in relevant chapter.

i) As advised by LMRC, depreciated rates for State Govt. structures have been taken after applying maximum allowable depreciation of 60%.

j) Rate of private commercial structures including land is calculated as 300 x specified monthly rent, published by Collectorate Varanasi, August' 15. 100% Solatium has been applied to basic cost of structures.

k) Annual cost of private land required on temporary basis (for construction of U/G stations at University, RBS college etc.) is calculated as 6% of corresponding circle rate of that locality. Construction period is taken as 3 years. No solatium has been applied to basic land cost.

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l) The total cost of Land works out to be Rs. 438.47 Crores for Corridor‐I and Rs. 36.99 Crores for Corridor‐II.

13.1.3 Items other than Land: Cost of items other than land is based upon LAR / DPR rates as under:‐ TABLE 13.3: BASIS OF RATES Item Item Basis of Rates No. 2.0 Alignment and Formation 2.1 Underground section by Avg. of Esc. Rates of DMRC Ph‐4 DPR May'14 & LMRC DPR T.B.M excluding station May'13 (Base rates are Rs. 111.00 Cr.& Rs. 105.71 Cr. Resp.) length 2.2 Underground section by cut Average of escalated rates of DMRC Ph‐IV DPR May'14 & LMRC & cover for Ramp DPR May'13. (Base rates are Rs. 102.87 Cr.& Rs. 97.97 Cr. Resp.) 2.3 U/G section by NATM for Estimated rates are based upon escalated rates (excluding taxes) alignment and access tunnel for Airport Express Metro Link Contract package no. C‐6, 2010. Completion cost is Rs. 308 Cr. inclusive of taxes and duties @ 20%. for 2.3 Km tunnel & one tunnel ventilation building. Estimated rates are worked out as Rs. (308‐8)/1.2/2.3 and escalation is applied. 2.4 Elevated section excluding Estimated rates are based upon accepted work (Sept'14) of viaduct length in station elevated priority corridor of LMRC. Total Length = 8250‐ 8x140(stn length)‐315 (special span) + 300 (depot connectivity) = 7115m. Cost of Viaduct is Rs. 324.2‐7.77 = Rs. 316.43 Cr. inclusive of taxes @ 18.54%. and Rs. 266.94 Cr. w/o taxes. Basic rates per km are 266.94/7.115 i.e. Rs. 37.52 Cr. and escalated rates comes out to Rs. 39.88 Cr. per Km. 2.5 Elevated Section‐ Special Estimated rates are derived from DMRC LAR for Mayapuri‐ Span Naraina CLC ‐ 34m+60m+34m at the cost of Rs. 15 Cr. (a) 34m+45m+34m 2.6 At‐grade Section Estimated rates are derived from escalated rates of At‐grade section of Nagpur Metro DPR (June’2012, Base rate is Rs. 2.90 Cr per Km) 2.7 Entry to Depot Estimated rates are based upon accepted work (Sept'14) of elevated priority corridor of LMRC. Total Length = 8250‐ 8x140(stn length)‐315 (special span) + 300 (depot connectivity) = 7115m. Cost of Viaduct is Rs. 324.2‐7.77 = Rs. 316.43 Cr. inclusive of taxes @ 18.54%. and Rs. 266.94 Cr. w/o taxes. Basic rates per km are 266.94/7.115 i.e. Rs. 37.52 Cr. and escalated rates comes out to Rs. 39.88 Cr. per Km.

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Item Item Basis of Rates No. 3.0 Station Buildings

3.1 Underground Station (160 m Length, 2‐Level) incl. EM works, VAC etc. by Cut & Cover

a Underground Station‐ As the length of station is only 160m, rates have been taken @ Structural Civil works 80% of Estimated rates based upon average of escalated rates of DMRC Ph‐IV DPR May'14 & LMRC DPR May'13. Base rates are Rs. 116.80 Cr.& Rs. 125.16 Cr. b Underground Station‐ EM As the length of station is only 160m, rates have been taken @ works etc. 80% of Estimated rates based upon average of escalated rates of DMRC Ph‐3 LAR CE‐09 (lot 3) 06.08.13 @ Rs. 24.63 Cr. c Underground Station ‐ ECS & As the length of station is only 160m, rates have been taken @ TVS etc 80% of Estimated rates based upon average of escalated rates of DMRC Ph‐3 LAR CE‐10 & 11 (lot 3) 08.05.13 @ Rs. 30.12 Cr. 3.2 Underground Station (140 m Length or less, 3‐Level) incl. EM works, VAC etc. by Cut & Cover

a Underground Station‐ Structural Civil works With 3‐level station, length of station is proposed as 140m / b Underground Station‐ EM 130m. The construction efforts shall be similar to 160m long 2‐ works etc. level station. Hence, rates adopted are same as that for 160 m

c Underground Station ‐ ECS & station with 2‐level. TVS etc

3.3 Underground Station (100 m Length or less, 4‐Level) incl. EM works, VAC etc. by Cut & Cover

a Underground Station‐ Structural Civil works With 4‐level station, length of station is proposed as 97m. The b Underground Station‐ EM construction efforts shall be similar to 140m long 3‐level station. works etc. Hence, rates adopted are same as that for 140 m station with 3‐

level. c Underground Station ‐ ECS & TVS etc 3.5 Underground Station‐ As the length of station is only 160m, rates have been taken @ Architectural Finishes 80% of Estimated rates based upon average of escalated LAR of LMRC ‐ accepted cost (July'15) of Rs. 58.74 Cr. inclusive of taxes and duties @ Rs. 18.54% for 8 elevated Stations(140m). Base cost per LMRC station (140m) comes out to Rs. 7.3425 Cr. with taxes and Rs. 6.19 cr. per station without taxes) are adopted.

3.6 Elevated Station Buildings (85mx19.2 or less)

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Item Item Basis of Rates No. a Elevated station ‐ Civil Works For Kanpur MRTS length of elevated station for 6‐coaches was including Viaduct kept as 140m. For Kanpur DPR, Estimated rates are based upon LMRC accepted cost of Rs. 261 Cr. (Sep'14) for 8 Stations inclusive of taxes & duties @ 18.54% and Rs. 220.18 Cr. without taxes & duties. For Kanpur MRTS, Cost of 140m x 27m and 140m x 24m elevated stations comes out to Rs. 32.28 Cr./station and Rs. 28.70 Cr./station respectively. As the length of elevated station for Varanasi MRTS is 85m / 75m, reduced rates @75% of rates for Kanpur DPR have been taken. Accordingly, for Varanasi MRTS, Cost of 85m x 19.20m elevated stations is worked out as Rs. 21.79 Cr./station. The LAR based cost of 3‐coach elevated stations at Kochi Metro comes out to Rs. 40 Cr./station which is higher than the awarded cost of the 6‐coach 8 numbers elevated stations for Lucknow Metro. Hence, LAR of Kochi metro have not been applied to Varanasi Metro. b Elevated station ‐ EM Works Estimated rates are based upon awarded rates of Kochi Metro, etc. KE‐10 dt. 12.12.2014. Avg. cost 4.21 Cr./Stn plus escalation. 3.7 Elevated Station‐ As the length of station is only 85m, rates have been taken @ Architectural Finishes 80% of Estimated rates based upon LMRC accepted cost (July'15) of Rs. 58.74 Cr. inclusive of taxes and duties @ Rs. 18.54% for 8 elevated Stations(140m). Cost per LMRC station (140m) comes out to Rs. 7.3425 Cr. with taxes and Rs. 6.19 cr. per station without taxes) are adopted. 3.10 Lifts & Escalators (Elevated and UG stations)

a Lifts Estimated rates are based upon DMRC Ph‐3 LAR CE‐3 (lot 1 & 2) Dec'12, Rs. 32.27 lacs. plus escalation. b Escalators Estimated rates are based upon DMRC Ph‐3 LAR CE‐4 (lot 1 & 2) May'13, Rs. 68.69 lacs. plus escalation. 4.0 Maintenance Depot

4.1 Civil works Estimated rates are based upon LMRC Depot LAR, April'15, excluding taxes and duties i.e. Rs. 107.29 Cr. Out of the two depots, Depot at Kalindi Vihar for Corridor‐2 is located in low lying area and cost of filling by average 2.0m has been included in civil cost. 4.2 EM works + Machinery & Estimated rates for E&M are based upon LMRC Depot LAR, Plant + General Works April'15, excluding taxes and duties @ Rs. 18.44 Cr. Rates for Machinery & Plant totalling Rs.90 Cr. are based upon various relevant LARs. 5.0 P‐Way

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Item Item Basis of Rates No. 5.1 Ballastless track for elevated Estimated rates are based upon average of escalated rates of & underground Section DMRC Ph‐IV DPR May'14 & LMRC DPR May'13.

5.2 Ballasted track for Depot Estimated rates are based upon average of escalated rates of DMRC Ph‐IV DPR May'14 & LMRC DPR May'13.

5.3 Ballastless track for entry to Estimated rates are based upon average of escalated rates of Depot DMRC Ph‐IV DPR May'14 & LMRC DPR May'13.

6.0 Traction & power supply incl. Third Rail, RSS, TSS, ASS etc. 6.1 UG Section and Elevated Estimated rates are based upon awarded rates of BMRCL section including SCADA Dec,2009 Rs 11.78 Cr./Km plus escalation. 6.2 For Depot Entry Estimated rates are based upon awarded rates of BMRCL Dec,2009 Rs 11.78 Cr./Km plus escalation. 6.3 For Depot Estimated rates are based upon awarded rates of BMRCL Dec,2009 Rs 11.78 Cr./Km plus escalation. 6.4 For 132kV GIS and 132kV Estimated rates are based upon DMRC Ph‐IV DPR plus cable/transmission line from escalation. GSS to RSS 7.0 Signalling and Telecom.

7.1 Signalling Estimated rates are based upon awarded rates of LMRC, Sept'15. 7.2 Telecommunication Estimated rates are based upon 90% of awarded rates of LMRC, Sept'15. 7.3 Automatic fare collection Estimated rates are based upon Jaipur Metro LAR, Mar'12 @3.67 Cr. Per station plus escalation. 7.4 Central Clearing House As per prevalent DMRC rates. System (CCHS) 7.5 Platform Screen Doors As 3‐coach are proposed, rates adopted are 70% of the (LAR i.e. DMRC / 20/111 ‐ 196/2014 (Lot 3), May'15, Rs. 2.26 Cr. for 6 Coaches, 24 doors). 8.0 Rolling Stock Estimated rates are based upon LMRC accepted rates SEP'15.

9.0 Environment, R & R incl. Hutments etc. a Environmental Cost As per details given in Chapter 12 b R & R As per details given in Chapter 12 10.0 Misc. Utilities, road works, Topographic Surveys, Geotechnical Investigation, Barricading, Tree Cutting and replanting, other civil works such as signage's, Environmental protection and traffic management.

10.1 & Civil works & Electrical works Estimated rates are based upon average of escalated rates of 10.2 DMRC Ph‐IV DPR May'14 & LMRC DPR May'13.

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Item Item Basis of Rates No. 11.0 Capital Expenditure on Security: Estimated rates are based upon average of escalated rates of DMRC Ph‐IV DPR May'14 & LMRC DPR May'13. The expenditure is required to cover the civil and Electrical items, equipments (X‐Ray machine, Metal detector etc.)

12.0 Staff Quarters and OCC Building: Estimated rates are based upon average of escalated rates of DMRC Ph‐IV DPR May'14 & LMRC DPR May'13. OCC building is included in cost estimate for corridor‐1 only and it will cover Corridor‐2 also. As such, no separate OCC building will be required for corridor‐2. Cost for Green Building concept has been taken as Rs. 7 Cr. for each corridor. This is based upon cost of Rs. 10 cr. taken for 23 Km Corridor of Kanpur MRTS.

13.0 Capital Expenditure on Inter modal integration including Footpath for pedestrians, Feeder Buses and Bicycles @2% of Total Cost excluding Land ‐ As per LMRC DPR, it is taken @ 2% of total cost excluding land.

13.1.4 Capital Cost Estimate The abstract of capital cost estimate of Corridor‐1 & 2 is given in Table 13.4. Detailed capital cost estimate for Corridor‐1 & 2 is given in Table 13.5 and 13.6 respectively.

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TABLE 13.4: ABSTRACT OF COST ESTIMATE OF CORRIDOR‐1 & 2 Corridor‐1 Corridor‐2 S. No. Item Amount Amount (Rs. in Crore) (Rs. in Crore) 1 Land 438.47 36.99 2 Alignment and Formation 1950.92 960.11 Station Buildings incl. Civil works, EM works, ECS, TVS, 3 2409.98 1295.42 Lift, escalators & Architectural Finishes etc Depot including civil, EM, Machinery & plants, general 4 218.31 0.00 works 5 P‐Way for main line, depot and depot connectivity 199.19 80.46 6 Traction & power supply 750V DC 439.43 181.08 Signalling and Telecom. Incl. AFC, Platform screen 7 392.74 195.24 doors, CCHS etc. 8 Rolling Stock 684.18 325.80 9 R & R incl. Hutments etc. 8.99 2.95 Misc. Utilities, road works, Topographic Surveys, Geotechnical Investigation, Barricading, Tree Cutting 10 143.00 73.05 and replanting, other civil works such as signage's, Environmental protection and traffic management Capital Expenditure on Security including civil and EM 11 5.61 2.97 works Staff Quarters and OCC Building and green building 12 concept (Cost of OCC building is included in corridor‐1 92.83 21.63 only) Capital Expenditure on Inter modal integration 13 including Footpath for pedestrians, Feeder Buses and 130.90 62.77 Bicycles @2% of Total Cost excluding Land 14 Total of all items except Land 6676.08 3201.49 General Charges incl. Design charges, including Metro Bhawan, (Civil+EM works) @ 7% on all items except 15 467.33 224.10 land. (Metro Bhawan is charged to coridor‐1 only and it will cater to both the corridors) 16 Total of all items including G. Charges 7143.41 3425.59 17 Contingencies @ 3 % on all items except land 214.30 102.77 Gross Total including Contingencies (excluding Land Cost) 7357.71 3528.36 Gross Total including Contingencies (including Land Cost) 7796.18 3565.35 Insurance 0.6% of Capital cost excluding land 40.06 19.21 Gross Total including Insurance, Contingencies and Land 7836.00 3585.00 Taxes & Duties 1157.00 555.00 Gross Total including Taxes & Duties 8993.00 4140.00 Note: For quantities of various items, detailed estimate may be referred.

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TABLE 13.5: CAPITAL COST ESTIMATE CORRIDOR‐1 CORRIDOR ‐ 1: BHEL TO BHU Total Length = 19.47 Km, From = (‐) 325m to 19025m, UG = 15.505 Km & ELEV = 3.845 Km Depot Entry = 0.12 Km, Stations = 17, Elevated = 4 Nos. & U/G by Cut & cover = 13 Nos. Jan' 2016, Price Level Amount (Rs. S. Rate (Rs. in Item Unit Qty. in Crore) No. Crore) Without taxes 1.0 Land Central Govt. Land ‐Permanent (without a Ha 34.80 0.07 2.44 Solatium) Central Govt. Land ‐Temporary (@ 6% of circle b Ha 6.260 0.40 2.50 rates PA for 3 years, without Solatium) Central Govt. Structures (PRS at Varansasi c Cantt including structure, Electrical, S&T, Ha 3.00 LS 3.00 Terminal etc) State Govt. Land ‐Permanent (for Alignment, d Depot, RSS, Ancillary Bldgs, Misc., without Ha 5.50 1.00 5.50 Solatium) e State Govt. Land ‐Temporary Ha 1.32 2.60 3.43 State Govt. Structures ‐Permanent f Ha 7.01 0.2633 1.85 (Depreciated cost after 60% depreciation) Private Land ‐Permanent (for Depot including g Ha 21.85 13.20 288.42 Solatium) Private Land ‐Permanent (for Alignment, RSS, h Ha 48.40 1.35 65.34 Ancillary Bldgs, Misc., including Solatium) Private Land ‐Temporary (for underground i station by cut & cover etc, Misc., @ 6% of Ha 5.198 2.50 13.00 circle rates PA for 3 years, including Solatium) Private Land ‐Temporary (for casting yard j Ha 5.198 6.00 31.19 including Solatium) Private Structure ‐ Permanent including Solatium as per LARRA (average rate has been k worked out after applying relevant circle Ha 20.40 1.02 20.81 rates Aug' 2015 for residential and commercial structures) Cost of Structures for rehabtilation of l Ha 25.00 0.04 1.00 squatters at Tulsi Manas Mandir Sub Total (1) 438.47 2.0 Alignment and Formation Underground section by T.B.M excluding 2.1 R. Km. 121.39 13.072 1586.81 station length 2.2 Underground section by cut & cover for Ramp R. Km. 112.50 0.224 25.20 U/G section by NATM for alignment and 2.3 R. Km. 142.15 1.349 191.76 access tunnel

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Amount (Rs. S. Rate (Rs. in Item Unit Qty. in Crore) No. Crore) Without taxes Elevated section excluding viaduct length in 2.4 R. Km. 40.37 3.525 142.30 station Elevated Section 2.5 Each 13.57 0.00 0.00 (Special Span ‐34m+45m+34m = 113m) 2.6 At‐grade Section R. Km. 3.45 0.00 0.00 2.7 Entry to Depot R. Km. 40.37 0.12 4.84 Sub Total (2) 1950.92 3.0 Station Buildings Underground Station (160 m length, 2 Level) 3.1 incl. EM works, VAC etc. by Cut & Cover a Underground Station‐ Structural Civil works Each 106.43 4.00 425.72 b Underground Station‐ EM works etc. Each 22.17 4.00 88.68 c Underground Station ‐ ECS & TVS etc Each 27.45 4.00 109.80 Underground Station (140 m or less length, 3 3.2 Level) incl. EM works, VAC etc. by Cut & Cover a Underground Station‐ Structural Civil works Each 106.43 7.00 745.01 b Underground Station‐ EM works etc. Each 22.17 7.00 155.19 c Underground Station ‐ ECS & TVS etc Each 27.45 7.00 192.15 Underground Station (100 m or less length, 4 3.3 Level) incl. EM works, VAC etc. by Cut & Cover a Underground Station‐ Structural Civil works Each 106.43 2.00 212.86 b Underground Station‐ EM works etc. Each 22.17 2.00 44.34 c Underground Station ‐ ECS & TVS etc Each 27.45 2.00 54.90 Underground Station (160 m length) incl. EM 3.4 works, VAC etc. by NATM a Underground Station‐ Structural Civil works Each 180.00 0.00 0.00 b Underground Station‐ EM works etc. Each 22.17 0.00 0.00 c Underground Station ‐ ECS & TVS etc Each 27.45 0.00 0.00 3.5 Underground Station‐ Architectural Finishes Each 9.61 13.00 124.93 Elevated Station Buildings (Type ‐I: 3.6 85mx19.2m) Elevated station ‐ Civil Works including a Each 22.06 4.00 88.24 Viaduct b Elevated station ‐ EM Works etc. Each 4.44 4.00 17.76 3.7 Elevated Station‐ Architectural Finishes Each 5.07 4.00 20.28 3.8 At‐grade Station Building a At‐grade station ‐ Civil Works Each 16.26 0.00 0.00 b At‐grade station ‐ EM Works etc. Each 4.44 0.00 0.00 3.9 At‐grade Station‐ Architectural Finishes Each 5.07 0.00 0.00

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Amount (Rs. S. Rate (Rs. in Item Unit Qty. in Crore) No. Crore) Without taxes Lifts & Escalators (Elevated, At‐grade and UG 3.10 stations) a Lifts Each 0.38 53.00 20.14 b Escalators Each 0.78 141.00 109.98 Sub Total (3) 2409.98 4.0 Maintenance Depot 4.1 Civil works LS 109.49 EM works + Machinery & Plant + General 4.2 LS 108.82 Works Sub Total (4) 218.31 5.0 P‐Way Ballastless track for elevated & underground Route 5.1 8.14 19.35 157.51 Section Km. Track 5.2 Ballasted track for Depot 4.07 10.00 40.70 Km. Route 5.3 Ballastless track for entry to Depot 8.14 0.12 0.98 Km. Sub Total (5) 199.19 6.0 Traction & power supply (750V DC) Route 6.1 UG Section & Elevated including SCADA 15.79 19.35 305.54 Km. Route 6.2 For Depot entry 15.79 0.12 1.89 Km. Track 6.3 For Depot 7.90 10.00 79.00 Km. 6.4 Differential cost of 132kV GIS LS 20.00 132kV cable/transmission line from GSS to 6.5 LS 33.00 RSS. Sub Total (6) 439.43 7.0 Signalling and Telecom. 7.1 Signalling R. Km. 8.78 19.35 169.89 Per 7.2 Telecommunication 4.64 17.00 78.88 Station Per 7.3 Automatic fare collection 4.42 17.00 75.14 station 7.4 Central Clearing House System (CCHS) Each 18.00 1.00 18.00 Per 7.5 Platform Screen Doors 1.63 17.00 27.71 Station Per 7.6 LED Screens for PD 1.36 17.00 23.12 Station Sub Total (7) 392.74 8.0 Rolling Stock Each 10.86 63.00 684.18 Sub Total (8) 684.18 9.0 R & R incl. Hutments etc.

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Amount (Rs. S. Rate (Rs. in Item Unit Qty. in Crore) No. Crore) Without taxes 9.1 Environmental Cost As per 5.50 details given in 9.2 R & R 3.49 Chapter 12 Sub Total (9) 8.99 Misc. Utilities, road works, Topographic Surveys, Geotechnical Investigation, Barricading, Tree Cutting and replanting, 10.0 other civil works such as signage's, Environmental protection and traffic management 10.1 Civil works R. Km. 4.04 19.350 78.17 10.2 Electrical Works R. Km. 3.35 19.350 64.82 Sub Total (10) 143.00 11.0 Capital Expenditure on Security Per 11.1 Civil works 0.270 17.00 4.59 Station Per 11.2 EM works 0.060 17.00 1.02 Station Sub Total (11) 5.61 12.0 Staff Quarters and OCC Building 12.1 Civil works R. Km. 1.190 19.350 23.03 12.2 EM works R. Km. 0.290 19.350 5.61 12.3 Cost of OCC Building ‐ Civil Works LS 45.55 12.4 Cost of OCC Building ‐ E&M Works LS 11.64 12.5 Cost for Green Building concept LS 7.00 Sub Total (12) 92.83 Capital Expenditure on Inter modal integration including Footpath for 13.0 130.90 pedestrians, Feeder Buses and Bicycles @2% of Total Cost excluding Land 14.0 Total of all items except Land 6676.08

General Charges including Design charges, 15.0 incl. Metro Bhawan Building (Civil+EM works) 467.33 @ 7% on all items except land

16.0 Total of all items including G. Charges 7143.41

17.0 Contingencies @ 3 % on all items except land 214.30 18.0 Gross Total including Contingencies (excluding Land Cost) 7357.71 19.0 Gross Total including Contingencies (including Land Cost) = 7796.18 20.0 Insurance 0.6% of Capital cost excluding land 6233.83 Crore 40.06

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Amount (Rs. S. Rate (Rs. in Item Unit Qty. in Crore) No. Crore) Without taxes 21.0 Gross Total including Insurance = 7836.23 Say 7836.00 Taxes & Duties 1157.00 Total Cost including Taxes & Duties 8993.00

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TABLE 13.6: CAPITAL COST ESTIMATE CORRIDOR‐2 CORRIDOR ‐ 2: BENIA BAGH TO SARNATH Total Length = 9.885 Km, From = (‐) 245m to 9395m, ELEV = 1.923 Km, Underground = 7.717 Km, Stabling (UG) = 0.245 Km Stations = 9 No’s, Elevated = 2 No's Underground =7 No’s. Jan' 2016, Price Level Rate (Rs. in Amount (Rs. in S. No. Item Unit Qty. Crore) Crore) Without taxes 1.0 Land Central Govt. Land ‐Permanent (without a Ha 34.80 0.14 4.872 Solatium) Central Govt. Land ‐Temporary (@ 6% of b Ha 2.43 0.0000 0.00 circle rates PA for 3 years, without Solatium) Central Govt. Structures‐ Permanent (PRS at c Cantt Rly stn, Cost of structure, electrical, S&T, Ha 34.00 0.0242 0.82 Terminals etc.,) State Govt. Land ‐Permanent (for Alignment, d Depot, RSS, Entry/Exits, Ancillary Bldgs, Misc., Ha 5.50 1.100 6.05 without Solatium) e State Govt. Land ‐Temporary Ha 1.32 2.10 2.77

State Govt. Structures ‐Permanent f Ha 5.854 0.105 0.61 (Depreciated cost after 60% depreciation) Private Land ‐Permanent (for Alignment, RSS, g Entry/Exits, Ancillary Bldgs, Misc., including Ha 30.965 0.130 4.03 Solatium) Private Land ‐Temporary (for underground h station by cut & cover etc, Misc., @ 6% of Ha 5.57 0.00 0.00 circle rates PA for 3 years, including Solatium) Private Structure ‐ Permanent including Solatium as per LARRA (average rate has been i worked out after applying relevant circle rates Ha 99.068 0.180 17.83 Aug' 2015 for residential and commercial structures) Sub Total (1) 36.989 2.0 Alignment and Formation Underground section by T.B.M excluding 2.1 R. Km. 121.39 6.078 737.81 station length 2.2 Underground section by cut & cover for Ramp R. Km. 112.50 0.402 45.23 U/G section by NATM for alignment and 2.3 R. Km. 142.15 0.745 105.90 access tunnel Elevated section excluding viaduct length in 2.4 R. Km. 40.37 1.763 71.17 station Elevated Section (Special Span ‐ 2.5 Each 13.57 0.00 0.00 34m+45m+34m = 113m) 2.6 At‐grade Section R. Km. 3.45 0.00 0.00

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2.7 Entry to Depot R. Km. 40.37 0.00 0.00 Sub Total (2) 960.11 3.0 Station Buildings Underground Station (160 m length, 2 Level) 3.1 incl. EM works, VAC etc. by Cut & Cover a Underground Station‐ Structural Civil works Each 106.43 1.00 106.43 b Underground Station‐ EM works etc. Each 22.17 1.00 22.17 c Underground Station ‐ ECS & TVS etc Each 27.45 1.00 27.45 Underground Station (140 m or less length, 3 3.2 Level) incl. EM works, VAC etc. by Cut & Cover a Underground Station‐ Structural Civil works Each 106.43 5.00 532.15 b Underground Station‐ EM works etc. Each 22.17 5.00 110.85 c Underground Station ‐ ECS & TVS etc Each 27.45 5.00 137.25 Underground Station (100 m or less length, 4 3.3 Level) incl. EM works, VAC etc. by Cut & Cover a Underground Station‐ Structural Civil works Each 106.43 1.00 106.43 b Underground Station‐ EM works etc. Each 22.17 1.00 22.17 c Underground Station ‐ ECS & TVS etc Each 27.45 1.00 27.45 Underground Station (180 m length) incl. EM 3.4 works, VAC etc. by NATM a Underground Station‐ Structural Civil works Each 180.00 0.00 0.00 b Underground Station‐ EM works etc. Each 22.17 0.00 0.00 c Underground Station ‐ ECS & TVS etc Each 27.45 0.00 0.00 3.5 Underground Station‐ Architectural Finishes Each 9.61 7.00 67.27 Elevated Station Buildings (Type ‐I: 3.6 85mx19.2m)

a Elevated station ‐ Civil Works including Viaduct Each 22.06 2.00 44.12

b Elevated station ‐ EM Works etc. Each 4.44 2.00 8.88 3.7 Elevated Station‐ Architectural Finishes Each 5.07 2.00 10.14 3.8 At‐grade Station Building a At‐grade station ‐ Civil Works Each 16.26 0.00 0.00 b At‐grade station ‐ EM Works etc. Each 4.44 0.00 0.00 3.9 At‐grade Station‐ Architectural Finishes Each 5.07 0.00 0.00 Lifts & Escalators (Elevated, At‐grade and UG 3.10 stations) a Lifts Each 0.38 27.00 10.26 b Escalators Each 0.78 80.00 62.40 Sub Total (3) 1295.42 4.0 Maintenance Depot Civil works including filling for low lying depot 4.1 LS 0.00 land EM works + Machinery & Plant + General 4.2 LS 0.00 Works

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Sub Total (4) 0.00 5.0 P‐Way Ballastless track for elevated & underground Route 5.1 8.14 9.885 80.46 Section Km. Track 5.2 Ballasted track for Depot 4.07 0.00 0.00 Km. Route 5.3 Ballastless track for entry to Depot 8.14 0.00 0.00 Km. Sub Total (5) 80.46 6.0 Traction & power supply (750V DC) Route 6.1 UG Section & Elevated including SCADA 15.79 9.885 156.08 Km. Route 6.2 For Depot entry 15.79 0.00 0.00 Km. Track 6.3 For Depot 7.90 0.00 0.00 Km. 6.4 Differential cost of 132kV GIS LS 10.00 6.5 132kV cable from GSS to RSS. LS 15.00 Sub Total (6) 181.08 7.0 Signaling and Telecom. 7.1 Signaling R. Km. 8.78 9.885 86.79 Per 7.2 Telecommunication 4.64 9.00 41.76 Station Per 7.3 Automatic fare collection 4.42 9.00 39.78 station 7.4 Central Clearing House System (CCHS) Each 18.00 0.00 0.00 Per 7.5 Platform Screen Doors 1.63 9.00 14.67 Station Per 7.6 LED Screens for PD 1.36 9.00 12.24 Station Sub Total (7) 195.24 8.0 Rolling Stock Each 10.86 30.00 325.80 Sub Total (8) 325.80 9.0 R & R incl. Hutments etc. 9.1 Environmental Cost As per 2.28 details given in 9.2 R & R Chapter 0.67 12 Sub Total (9) 2.95 Misc. Utilities, road works, Topographic Surveys, Geotechnical Investigation, Barricading, Tree Cutting and replanting, 10.0 other civil works such as signage's, Environmental protection and traffic management 10.1 Civil works R. Km. 4.04 9.885 39.94 10.2 Electrical Works R. Km. 3.35 9.885 33.11

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Sub Total (10) 73.05 11.0 Capital Expenditure on Security Per 11.1 Civil works 0.270 9.00 2.43 Station Per 11.2 EM works 0.060 9.00 0.54 Station Sub Total (11) 2.97 12.0 Staff Quarters and OCC Buiulding 12.1 Civil works R. Km. 1.190 9.885 11.76 12.2 EM works R. Km. 0.290 9.885 2.87 12.3 Cost of OCC Building ‐ Civil Works LS 0.00 12.4 Cost of OCC Building ‐ E&M Works LS 0.00 12.5 Cost for Green Building concept LS 7.00 Sub Total (12) 21.63 Capital Expenditure on Inter modal integration including Footpath for 13.0 62.77 pedestrians, Feeder Buses and Bicycles @2% of Total Cost excluding Land 14.0 Total of all items except Land 3201.49

General Charges including Design charges, 15.0 incl. Metro Bhawan Building (Civil+EM works) 224.10 @ 7% on all items except land

16.0 Total of all items including G. Charges 3425.59

17.0 Contingencies @ 3 % on all items except land 102.77 18.0 Gross Total including Contingencies (excluding Land Cost) 3528.36 19.0 Gross Total including Contingencies (including Land Cost) = 3565.35 20.0 Insurance 0.6% of Capital cost excluding land 3201.49 Crore 19.21 21.0 Gross Total including Insurance = 3584.56 Say 3585.00 Taxes & Duties 555.00 Total Cost including Taxes & Duties 4140.00

13.1.5 Taxes and Duties Basic cost is exclusive of various taxes and duties viz. custom duty, excise duty, VAT etc. and details of taxes and duties are worked out separately. Current rates of various taxes and duties have been taken into consideration and taxes / duties have been applied as per LMRC. Central and state taxes and duties (customs, Excise and VAT) for Corridor ‐1 & 2 have been worked out to Rs. 1157 Crores and Rs. 555 Crores respectively and are detailed in Table 13.7 and 13.8.

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TABLE 13.7: DETAILS OF TAXES AND DUTIES CORRIDOR – 1 Customs Duty = 22.85% Excise Duty = 12.50% VAT = 12.50%

Taxes and duties Total cost Total S. without Custom Excise Taxes & Description VAT No. Taxes & Duty Duty Duties (Cr.) duties (Cr.) (Cr.) (Cr.) (Cr.) 1 Alignment & Formation Underground 1803.77 123.67 110.48 62.15 296.29

Elevated, At‐grade & entry to Depot 147.15 12.88 7.24 20.12

2 Station Buildings a) Underground station‐civil works 1508.52 103.42 92.40 51.97 247.79 b) Underground station‐EM works 775.18 53.15 57.65 32.43 143.23 c) Elevated station ‐ civil works 108.52 9.50 5.34 14.84 d) Elevated station‐EM works 17.76 0.81 1.51 0.85 3.17 e) At‐grade station ‐ civil works 0.00 0.00 0.00 0.00 f) At‐grade station‐EM works 0.00 0.00 0.00 0.00 0.00 3 Depot Civil works 109.49 7.51 6.71 3.77 17.99 EM works 108.82 4.97 9.25 5.20 19.43 4 P‐Way 199.19 36.42 4.23 2.38 43.03 5 Traction & power supply a) Traction and power supply 439.43 40.17 28.01 15.76 83.94 6 S and T Works a) S & T 248.77 45.48 5.29 2.97 53.74 b) AFC, PSD, LED screens & CCHS 143.97 24.68 3.82 2.15 30.65 7 Rolling stock 684.18 137.59 6.67 3.75 148.02 8 R & R hutments 8.99 0.56 0.56 9 Misc. Civil works 78.17 6.84 3.85 10.69 EM works 64.82 6.89 3.87 10.76 10 Security Civil works 4.59 0.40 0.28 0.68 EM works 1.02 0.13 0.10 0.23 11 Staff Quarters & OCC Buildings Civil works 68.58 6.00 0.44 6.44 EM works incl. green bldg. conept 24.25 3.03 2.18 5.21 Total 6545.18 577.86 371.69 207.25 1156.80 Total Taxes & Duties 1157

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TABLE 13.8: DETAILS OF TAXES AND DUTIES CORRIDOR – 2 Customs Duty = 22.85% Excise Duty = 12.50% VAT = 12.50%

Taxes and duties Total cost Total S. without Custom Excise Taxes & Description VAT No. Taxes & Duty Duty Duties (Cr.) duties (Cr.) (Cr.) (Cr.) (Cr.) 1 Alignment & Formation Underground 888.94 60.94 54.45 30.63 146.02 Elevated & entry to Depot 71.17 6.23 3.50 9.73 2 Station Buildings a) Underground station‐civil works 812.28 55.69 49.75 27.99 133.43 b) Underground station‐EM works 420.00 28.79 31.24 17.57 77.60 c) Elevated station ‐ civil works 54.26 4.75 2.67 7.42 d) Elevated station‐EM works 8.88 0.41 0.75 0.42 1.59 3 Depot Civil works 0.00 0.00 0.00 0.00 0.00 EM works 0.00 0.00 0.00 0.00 0.00 4 P‐Way 80.46 14.71 1.71 0.96 17.38 5 Traction & power supply a) Traction and power supply 181.08 16.55 11.54 6.49 34.59 6 S and T Works a) S & T 128.55 23.50 2.73 1.54 27.77 b) AFC, PSD,LED screens & CCHS 66.69 11.43 1.77 1.00 14.20 7 Rolling stock 325.80 65.52 3.18 1.79 70.48 8 R & R hutments 2.95 0.18 0.18 9 Misc. Civil works 39.94 3.49 1.97 5.46 EM works 33.11 3.52 1.98 5.50 10 Security Civil works 2.43 0.21 0.15 0.36 EM works 0.54 0.07 0.05 0.12 11 Staff Quarters & OCC Buildings Civil works 11.76 1.03 0.08 1.10 EM works incl. green bldg. conept 9.87 1.23 0.88 2.12 Total 3138.72 277.55 177.66 99.85 555.06 Total Taxes & Duties 555

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13.2 OPERATION AND MAINTENANCE COST

The Operation and Maintenance cost for Varanasi MRTS Corridors is worked under three major heads:

 Staff cost  Maintenance cost which includes expenditure towards upkeep and maintenance of the system and consumables and  Energy cost

Staff Cost The O&M staff is assumed to be provided @ 35 persons per kilometer and the annual cost this account is estimated considering average staff salary of Rs. 6.54 Lakhs per annum in the year 2016. The escalation factor used for staff costs is 9% per annum to provide for growth in salaries. The staff cost for the corridors of BHU to BHEL corridor and Beniabagh to Sarnath corridor is estimated to be Rs 81.18 crore and Rs 41.43 Crore respectively for the inception year i.e. 2023.

Maintenance Expenses Maintenance expenses are taken @ Rs. 1.34 Crores/km in the year 2016. Maintenance cost for Varanasi Metro corridors would be Rs 43.25 Crores and Rs 22.07 crores for corridor 1 and corridor 2 respectively in the inception year i.e. 2023 considering escalation @ 7.5% p.a. for every year of operation.

Energy Charges The energy consumption to meet the traction and non‐traction power requirement is based on traffic demand for different horizon years. The cost of electricity is a significant part of O&M charges, constituting about 40‐50% of total annual working cost. The traction power tariff is taken @ Rs. 5.60 per kVAh and fixed charges@125/kVA/ month in the year 2015 based on UPPTCL tariff order 2015, which is escalated @ 7.5% every year of operation. Annual energy consumption charges have been estimated as Rs. 133.79 crores in year 2023, Rs. 238.61 crores in 2031, Rs 540.88 crores in 2041, Rs. 1270.46 crores in 2051 for BHU to BHEL corridor and Rs. 63.53 Crores in year 2023, Rs. 113.31 crores in 2031, Rs 262.09 crores in 2041, Rs. 599.87 crores in 2051 for Beniabagh to Sarnath.

Additional Investment To cater to increased traffic demand, additional investment will have to be made for purchase of additional coaches. The additional investment in the year 2031 works out to Rs.

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131.55 Crores for purchase of 9 additional coaches for BHU to BHEL Corridor and Rs. 131.55 Crores for 9 additional coaches for Beniabagh to Sarnath corridor in year 2031. An investment of Rs. 534.51 Crores would be required for purchase of 30 additional coaches in the year 2041 (Rs 427.61 crores for 24 additional coaches for BHU to BHEL Corridor and Rs 106.90 crores for 6 additional coaches for Beniabagh to Sarnath corridor) and Rs 586.41 Crores for purchase of 27 additional coaches in the year 2051 (Rs 390.94 crores for 18 coaches for corridor 1 and Rs 195.47 crores for 9 coaches for corridor 2).These additional investments have been worked out considering an escalation factor of 2% per annum.

Replacement Cost The replacement costs are provided for meeting the cost on account of replacement of equipments due to wear and tear. With the nature of equipment proposed to be provided for the corridor, it is expected that about 25% of the equipment comprising Electrical, Rolling stock and 50% of Signalling & Telecom would require replacement/ rehabilitation after 20 years. The replacement cost for the BHU to BHEL corridor works out to be Rs. 2407.68 Crores and Rs 1225.73 Crores for Beniabagh to Sarnath corridor. The replacement cost has been worked out considering an escalation factor of 5% per annum.

The year wise total Operation and Maintenance cost for the corridors of Varanasi MRTS is indicated in Table 13.9 and Table 13.10. .

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TABLE 13.9: O & M COST FOR BHU TO BHEL CORRIDOR (COST IN RS CRORE)

Maintenance Energy Addition/ Staff Cost Expenses Charges Total O&M Replace ‐ Year cost ment Cost Esc @9% Esc @7.5% Esc @7.5% (Cr.)

2023 81.18 43.25 133.79 258.22 2024 88.48 46.49 143.83 278.80 2025 96.45 49.98 154.61 301.04 2026 105.13 53.73 166.21 325.06 2027 114.59 57.76 178.67 351.02 2028 124.90 62.09 192.08 379.07 2029 136.14 66.75 206.48 409.37 2030 148.39 71.75 221.97 442.11 2031 161.75 77.13 238.61 477.50 131.55 Addition of 9 coaches 2032 176.31 82.92 282.11 541.34 2033 192.18 89.14 303.27 584.59 2034 209.47 95.82 326.02 631.31 2035 228.32 103.01 350.47 681.80 2036 248.87 110.74 376.75 736.36 2037 271.27 119.04 405.01 795.32 2038 295.69 127.97 435.39 859.04 2039 322.30 137.57 468.04 927.91 2040 351.30 147.88 503.14 1,002.33 2041 382.92 158.98 540.88 1082.78 427.61 Addition of 24 coaches 2042 417.38 170.90 662.65 1250.93 2043 454.95 183.72 712.35 1351.01 2,407.68 Replacement of 25% of 2044 495.89 197.50 765.77 1459.16 Elec. & 50% S&T assets 2045 540.53 212.31 823.21 1576.04 2046 589.17 228.23 884.95 1702.35 2047 642.20 245.35 951.32 1838.87 2048 700.00 263.75 1022.67 1986.41 2049 763.00 283.53 1099.37 2145.89 2050 831.67 304.80 1181.82 2318.28 2051 906.51 327.65 1270.46 2504.63 390.94 Addition of 18 coaches 2052 988.10 352.23 1521.80 2862.13 2053 1,077.03 378.65 1635.94 3091.61 2054 1,173.96 407.04 1758.63 3339.64 2055 1,279.62 437.57 1890.53 3607.72 2056 1,394.79 470.39 2032.32 3897.49 2057 1,520.32 505.67 2184.74 4210.73 2058 1,657.14 543.60 2348.60 4549.34

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TABLE 13.10: O & M COST FOR BENIA BAGH TO SARNATH CORRIDOR (COST IN RS CRORE)

Maintenance Energy Addition/ Staff Cost Expenses Charges Total O&M Replace ‐ Year cost ment Cost Esc @9% Esc @7.5% Esc @7.5% (Cr.)

2023 41.43 22.07 63.53 127.03 2024 45.15 23.73 68.30 137.18 2025 49.22 25.51 73.42 148.14 2026 53.65 27.42 78.92 159.99 2027 58.48 29.47 84.84 172.79 2028 63.74 31.69 91.21 186.63

2029 69.47 34.06 98.05 201.58 2030 75.73 36.62 105.40 217.74 2031 82.54 39.36 113.31 235.21 131.55 Addition of 9 coaches 2032 89.97 42.31 136.70 268.99 2033 98.07 45.49 146.96 290.51 2034 106.90 48.90 157.98 313.77 2035 116.52 52.57 169.83 338.91 2036 127.00 56.51 182.56 366.07 2037 138.43 60.75 196.25 395.43 2038 150.89 65.30 210.97 427.17 2039 164.47 70.20 226.80 461.47 2040 179.27 75.47 243.81 498.55 2041 195.41 81.13 262.09 538.63 106.90 Addition of 6 coaches 2042 213.00 87.21 312.88 613.09 2043 232.16 93.75 336.35 662.26 1,225.73 Replacement of 25% of 2044 253.06 100.78 361.57 715.42 Elec. & 50% S&T assets 2045 275.84 108.34 388.69 772.87 2046 300.66 116.47 417.84 834.97 2047 327.72 125.20 449.18 902.10 2048 357.21 134.59 482.87 974.68 2049 389.36 144.69 519.09 1053.14 2050 424.41 155.54 558.02 1137.96 2051 462.60 167.21 599.87 1229.68 195.47 Addition of 9 coaches 2052 504.24 179.75 720.80 1404.78 2053 549.62 193.23 774.86 1517.71 2054 599.08 207.72 832.98 1639.78 2055 653.00 223.30 895.45 1771.75 2056 711.77 240.04 962.61 1914.42 2057 775.83 258.05 1034.80 2068.68 2058 845.66 277.40 1112.41 2235.47

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13.3 ECONOMIC ANALYSIS

13.3.1 Approach The economic appraisal has been carried out within the broad framework of Social Cost – Benefit Analysis Technique. It is based on the incremental costs and benefits and involves comparison of project costs and benefits in economic terms under the “with” and “without” project scenario. In the analysis, the cost and benefit streams arising under the above project scenarios have been estimated in terms of market prices and economic values have been computed by converting the former using appropriate shadow prices. This has been done to iron out distortions due to externalities and anomalies arising in real world pricing systems. The annual streams of project costs and benefit have been compared over the analysis period of 40 years to estimate the net cost / benefit and to calculate the economic viability of the project in terms of EIRR.

The Economic Internal Rate of Return (EIRR) for the project has then been arrived using Discounted Cash Flow technique to the net benefit stream at economic prices.

13.3.2 Evaluation Assumptions The key assumptions used in the evaluation are listed in Table 13.11.

TABLE 13.11: KEY EVALUATION ASSUMPTIONS Parameter Assumption Price Level January ’2016 Construction period 2017‐2023 First year of operation of MRTS 2023 Daily to annual factor 340

13.3.3 Estimation of Benefits The Varanasi MRTS will yield tangible and non‐tangible savings due to equivalent reduction in road traffic and certain socio‐economic benefits. The Introduction of MRTS will result in reduction in number of mini buses, IPT, usage of private vehicles, air pollution and increase in the speed of road‐based vehicles. This, in turn, will result in significant social benefits due to reduction in fuel consumption, vehicle operating cost and travel time of passengers. Reduction in accidents, pollution and road maintenance costs are the other benefits to the society in general. The benefit stream includes:

 Capital and operating cost (on present congestion norms) of carrying the total volume of passenger traffic by existing mini bus and IPT system and private vehicles in case MRTS project is not taken up.

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 Savings in operating costs of mini buses, IPT and other vehicles due to de‐congestion including those that would continue to use the existing transport network even after the MRTS is introduced.

 Savings in time of commuters using the MRTS over the existing transport modes because of faster speed of MRTS.

 Savings in time of those passengers continuing on existing modes, because of reduced congestion on roads.

 Savings on account of prevention of accidents and pollution with introduction of MRTS.

 Savings in road infrastructure and development costs that would be required to cater to increase in traffic, in case MRTS is not introduced.

 Savings in fuel consumption on account of less number of vehicles on road and decongestion effect with introduction of MRTS are included in those of vehicle operating cost.

Various assumptions have been made, while assessing the economic benefits to the society with the introduction of MRTS system. Table 13.12 gives the assumptions made for VOC and VOT.

TABLE 13.12: ASSUMPTIONS FOR VOC & VOT Mode VOC* Rs /km Value of Travel Time**Passenger/ Hr Car 7.78 77 2w 3.38 36 Auto 5.84 36 Bus 18.65 58 *Source IRC SP 30 (2009) Values brought to 2015 level using factor of 5%

The Quantification of some of the social benefits has not been attempted because universally acceptable norms do not exist to facilitate such an exercise. However, it has been considered appropriate to highlight the same, as given below:

 Reduced road stress  Better accessibility to facilities in the influence area  Economic stimulation in the micro region of the infrastructure  Increased business opportunities  Overall increased mobility  Facilitating better planning and up‐gradation of influence area  Improving the image of the city

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13.3.4 Transport Demand on MRT Corridor Phase‐I At present Phase‐1 MRTS corridors are served by mini buses and IPT modes in addition to private vehicles. The total transport demand and demand estimated on Phase‐1 MRTS corridors for various years is given in Table 13.13. TABLE 13.13: TRANSPORT DEMAND FORECAST ON PHASE‐I MRTS CORRIDORS

Item 2021 2031 2041 Daily Total Trips (Lakh) 21.72 28.11 33.76 Daily Trips on MRT Corridors (Lakh) 5.09 6.72 9.15 Daily Trips by other modes (Lakh) 16.64 21.39 24.61

13.3.5 Savings i. Capital and Operating Cost The traffic on MRTS will come due to shifting of traffic from mini buses, IPT and private modes once a more efficient system is available. The major shifting of traffic would be from private vehicles. It has been estimated that 956 buses will be saved with the introduction of MRTS. This will save Rs. 212 Crore in the year 2023 towards capital and operating cost of bus system. The saving in respect of private vehicles and IPT modes will be approx. Rs. 147 Crore.

ii. Traffic Congestion MRT will contribute towards reducing the congestion and journey time on roads because of diversion of some traffic to MRTS. Reduction in traffic congestion will save the necessary capital investment and vehicle operating cost as well as increase in time saved per vehicle. With the implementation of MRTS, the savings from operating costs due to decongestion effect has been estimated to be Rs. 32 Crore in the year 2023.

iii. Passenger Time Savings With the introduction of proposed MRTS, there will be reduction in traffic congestion on the roads and correspondingly, there will be saving in time of commuters travelling by various modes of road transport. Similarly, MRTS itself being faster than conventional road transport modes will also lead to considerable saving in time of commuters traveling on MRTS. With the implementation of the project, the passenger time savings are estimated at Rs. 753 Crore for the year 2023.

iv. Safety The reduction in traffic volumes on roads brought about by modal transfer to the proposed MRTS is expected to reduce number of accidents. Any reduction in number of accidents will involve savings from damage to vehicles and savings towards medical and insurance expenses to persons involved in accidents. In the absence of data related to accidents on the corridor, this benefit could not be quantified.

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v. Reduced Air Pollution The benefits because of saving in cost of prevention of vehicular pollution, with the implementation of Varanasi Metro in the year 2023 are expected to be approx Rs. 28 Crore.

vi. Savings in Road Infrastructure The proposed MRT corridor will also bring savings in investment in road infrastructure because shifting of passengers to MRT and withdrawal of vehicles in the project area. Since no local data is available concerning the road infrastructure investment on this account, this saving has not been incorporated into economic evaluation.

13.3.6 Shadow Pricing The value of Project cost and benefits have been expressed in terms of market prices. These prices, however, do not reflect the real resource cost and value of benefits derived from the project to the economy. The market prices are distorted due to variety of factors. These factors could be controlled/administered prices of inputs, monopolistic market of inputs, tax structure etc. The factors used for converting project inputs and output to economic costs are given in following Table 13.14.

TABLE 13.14: FACTORS USED FOR CONVERTING PROJECT INPUTS AND OUTPUT TO ECONOMIC COSTS

S. No Item Factor 1 Capital Cost 0.85 2 Operations & Maintenance Cost 0.80 3 Savings in Capital & Operating Cost of Buses 0.89 4 Savings in Capital & Operating cost of Private Vehicles 0.8 5 Savings in Passenger Time 1.0 6 Savings in VOC 1.0 7 Savings in Accident Costs 1.0 8 Savings in Pollution Costs 1.0

13.3.7 Result of Economic Analysis The cost and benefit streams for 35 year period in the economic prices have been worked out and presented in Table 13.15.

The residual value of MRTS facilities (e.g. Metro corridors, equipment for power supply and tele‐communication, rolling stock, etc.) in last year has not been taken into account as benefit in these tables.

The total cost worked out on the above basis is then subtracted from the total benefits to estimate the net benefit of the project. This flow is then subjected to the process of discounting to work out the internal rate of return on the project, to examine the viability of the project in economic terms. Thereafter, the Project EIRR has been arrived by using shadow prices.

The EIRR of the project works out to 14.95 %.

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TABLE 13.15: COST BENEFIT STREAM: ECONOMIC PRICES Rs. in Crore Running From Savings From Net Cash Total Savings Total Year Capital Expense Others Flow Costs Buses Savings of MRTS Vehicles Time VOC POL Rs. in Cr. 2017‐18 702 0 702 0 0 0 0 0 0 -702 2018‐19 1277 0 1277 0 0 0 0 0 0 -1277 2019‐20 1734 0 1734 0 0 0 0 0 0 -1734 2020‐21 1864 0 1864 0 0 0 0 0 0 -1864 2021‐22 2671 0 2671 0 0 0 0 0 0 -2671 2022‐23 3590 308 3898 189 117 753 32 28 1119 -2779 2023‐24 1544 333 1876 209 130 833 35 31 1237 -639 2024‐25 0 359 359 231 143 921 39 34 1367 1008 2025‐26 0 388 388 255 158 1017 43 38 1511 1123 2026‐27 0 419 419 282 175 1125 47 42 1671 1252 2027‐28 0 453 453 312 193 1243 52 46 1847 1394 2028‐29 0 489 489 345 214 1374 58 51 2041 1552 2029‐30 0 528 528 381 236 1519 64 56 2256 1728 2030‐31 0 570 570 513 324 2051 59 63 3010 2440 2031‐32 0 648 648 567 358 2267 65 70 3328 2679 2032‐33 0 700 700 627 395 2506 72 77 3678 2978 2033‐34 0 756 756 693 437 2770 80 85 4065 3309 2034‐35 0 817 817 766 483 3062 88 94 4494 3677 2035‐36 0 882 882 847 534 3384 98 104 4967 4085 2036‐37 0 953 953 936 590 3740 108 115 5490 4537 2037‐38 0 1029 1029 1035 652 4134 119 128 6068 5039 2038‐39 0 1112 1112 1144 721 4570 132 141 6707 5596 2039‐40 0 1201 1201 1264 797 5051 146 156 7414 6213 2040‐41 454 1297 1751 1455 864 5750 418 173 8660 6908 2041‐42 0 1491 1491 1608 955 6356 462 192 9572 8080

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Running From Savings From Net Cash Total Savings Total Year Capital Expense Others Flow Costs Buses Savings of MRTS Vehicles Time VOC POL Rs. in Cr. 2042‐43 3088 1611 4699 1777 1055 7025 510 212 10580 5881 2043‐44 0 1740 1740 1498 890 5923 430 179 8919 7180 2044‐45 0 1879 1879 1528 907 6041 439 182 9098 7219 2045‐46 0 2030 2030 1559 926 6162 447 186 9280 7250 2046‐47 0 2193 2193 1590 944 6285 456 190 9465 7273 2047‐48 0 2369 2369 1622 963 6411 466 193 9655 7286 2048‐49 0 2559 2559 1654 982 6539 475 197 9848 7288 2049‐50 0 2765 2765 1687 1002 6670 484 201 10045 7280 2050‐51 498 2987 3486 1721 1022 6803 494 205 10246 6760 2051‐52 0 3414 3414 1756 1042 6939 504 209 10450 7037 2052‐53 0 3687 3687 1791 1063 7078 514 213 10659 6972 2053‐54 0 3984 3984 1826 1084 7220 524 218 10873 6889 2054‐55 0 4304 4304 1863 1106 7364 535 222 11090 6787 2055‐56 0 4650 4650 1900 1128 7511 545 227 11312 6662 2056‐57 0 5024 5024 1938 1151 7662 556 231 11538 6515 0 5428 5428 1977 1174 7815 568 236 11769 6341 IRR 14.95%

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13.3.8 Sensitivity Analysis A sensitivity analysis of the EIRR with 10% cost overrun and 10% reduction in traffic materialization (separately) has been carried out. The EIRRs under these scenarios are given in Table 13.16.

TABLE 13.16: PROJECT EIRR – SENSITIVITY ANALYSIS

Sensitivity Parameter EIRR (%) Basic EIRR 14.95 With increase in cost by 10% 14.14 With reduction in traffic materialization by 10% 14.20 With 10% reduction in traffic and increase in cost by 10% 13.42 With increase in cost by 20% 13.43

It can be seen from the above table that 10% increase in cost affects economic viability more than it does in case of reduction in traffic for the project. Accordingly, it is recommended that controls should be exercised to keep the project cost under control.

13.4 FINANCIAL ANALYSIS

The financial analysis has been carried out individual corridors and also for the two MRTS corridors combined. Accordingly, the capital costs and O&M costs for the two corridors have been added to arrive at the total capital and O& M costs.

13.4.1 Capital Cost Estimates The Construction cost of the metro corridors at Jan’ 2016 prices is estimated at Rs. 10946 Crore. The cost of land is estimated at Rs. 475 Crore including Rs. 441 Crore for private land and the cost of government land has been estimated at Rs 35 Crore. The total cost of project including land cost is estimated at Rs. 11,421 Crore.

The Central and State taxes and duties (Customs, Excise and VAT) amount to Rs. 1712Crore. The capital cost components at Jan '16 prices are given in Table 13.17.

TABLE 13.17: CAPITAL COSTS (Rs. in Crore) Cost Component Corridor I Corridor II Total Construction Cost Including land 7836 3585 11421 Land Cost 438 37 475  Private land 419 22 441  Govt land 20 15 35 Construction Cost excluding land 7398 3548 10946 Taxes 1157 555 1712  Central Taxes 950 455 1405  State Taxes 207 100 307 Total Cost with Land & Taxes 8993 4140 13133 Total Cost with Central Taxes only 8786 4040 12826

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13.4.2 Completion Cost With escalation factor of 7.5 % p.a., the Completion Cost of the project including land is estimated to be Rs. 15,743 Crore and with central taxes it is estimated at Rs 17,702 Crore. For financial analysis both govt and private land costs have been considered as acquisition of govt land will also require payouts. The land cost has not been escalated since land acquisition would be completed in the initial two years. It is proposed to start land acquisition and construction work prior to Year 2017 and commission the system by Year 2023. The details of completion cost under different scenarios are as per Table 13.18.

TABLE 13.18: DETAILS OF COMPLETION COSTS (Rs in Crore)

Particulars Completion Cost Cost without taxes 15,743 With Central Taxes 17,702 With both Central and State taxes 18,130

13.4.3 Requirement of Funds The year wise requirement of funds under different scenarios has been given in Table 13.19 (Without any Taxes), in Table 13.20 (With Central and State Taxes) and Table 13.21 (With Central Taxes only). The cost of land is divided into two initial years during which it is expected that the land acquisition work would be over and related payments would be released. TABLE 13.19: YEAR WISE FUND REQUIREMENTS WITHOUT TAXES (Rs. in Crore)

YEAR COMPLETION COST LAND COST TOTAL COMPLETION COST 2017‐2018 588 238 826 2018‐2019 1,265 238 1,503 2019‐2020 2,040 2,040 2020‐2021 2,193 2,193 2021‐2022 3,143 3,143 2022‐2023 4,223 4,223 2023‐2024 1,816 1,816 Total 15267 475 15743

TABLE 13.20: YEAR WISE FUND REQUIREMENTS WITH TAXES (Rs in Crore) Year Completion Cost Land Cost Taxes Total Completion Cost

2017‐2018 588 238 92 918 2018‐2019 1265 238 198 1700 2019‐2020 2040 319 2359 2020‐2021 2193 343 2536 2021‐2022 3143 492 3634 2022‐2023 4223 660 4884 2023‐2024 1816 284 2100 Total 15267 475 2388 18130

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TABLE 13. 21: YEAR WISE FUND REQUIREMENTS WITH CENTRAL TAXES (Rs in Crore)

Year Completion Cost Land Cost Taxes Total Completion Cost

2017‐2018 588 238 76 902 2018‐2019 1265 238 162 1665 2019‐2020 2040 262 2301 2020‐2021 2193 281 2474 2021‐2022 3143 403 3546 2022‐2023 4223 542 4765 2023‐2024 1816 233 2049 Total 15267 475 1959 17702

13.4.4 Additional Investment To cater to increased traffic demand, investment will have to be made for purchase of additional coaches and augmentation of maintenance infrastructure. The total additional investment for additional Rolling Stock and related equipment to take care of the increased traffic will be Rs. 263 Crore in the Years 2031 and Rs. 535 Crore in Year 2041 and Rs 586 Crore would be required in the year 2051.

13.4.5 Operation & Maintenance Costs The details of O&M costs are given at Para 10.2 of this Chapter. The total O&M cost in the year 2023 is estimated at Rs. 385 Crore. The total O&M cost in the year 2031is estimated at Rs. 713 Crore.

13.4.6 Replacement Cost The replacement costs are provided for meeting the cost on account of replacement of equipments due to wear and tear. The replacement cost for the corridors is estimated to be Rs. 3633 Crore in the year 2043. The year wise O&M cost and additional investments for two MRTS corridors are presented in Table 13.22.

TABLE 13.22: OPERATION AND MAINTENANCE COSTS (Rs in Crore)

Maintenance Energy Total O&M Staff Cost Additional Rolling Stock / Year Expenses Charges Cost (A) Replacement Cost (B) (C) (A+B+C) 2023 123 65 197 385 0 2024 134 70 212 416 0 2025 146 75 228 449 0 2026 159 81 245 485 0 2027 173 87 264 524 0 2028 189 94 283 566 0 2029 206 101 305 611 0 2030 224 108 327 660 0 2031 244 116 352 713 263

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2032 266 125 419 810 0 2033 290 135 450 875 0 2034 316 145 484 945 0 2035 345 156 520 1021 0 2036 376 167 559 1102 0 2037 410 180 601 1191 0 2038 447 193 646 1286 0 2039 487 208 695 1389 0 2040 531 223 747 1501 0 2041 578 240 803 1621 535 2042 630 258 976 1864 0 2043 687 277 1049 2013 3633 2044 749 298 1127 2175 0 2045 816 321 1212 2349 0 2046 890 345 1303 2537 0 2047 970 371 1401 2741 0 2048 1057 398 1506 2961 0 2049 1152 428 1618 3199 0 2050 1256 460 1740 3456 0 2051 1369 495 1870 3734 586 2052 1492 532 2243 4267 0 2053 1627 572 2411 4609 0 2054 1773 615 2592 4979 0 2055 1933 661 2786 5379 0 2056 2107 710 2995 5812 0 2057 2296 764 3220 6279 0 2058 2503 821 3461 6785 0

13.4.7 Revenues

i. Projected Traffic Demand

The ridership on the proposed Varanasi metro system has been estimated at 5.09 Lakh passenger trips per day in the year 2021 which will materialise by 2023 when MRTS comes in operation. The ridership figures for key horizon years are given in Table 13.23. After 2041, the traffic has been assumed to grow @ of 3% per annum.

TABLE 13.23: EXPECTED RIDERSHIP ON PHASE‐I MRTS CORRIDORS IN HORIZON YEARS PASSENGER TRIPS PER DAY (Lakh) Year CORRIDOR 1 CORRIDOR 2 TOTAL 2022 3.18 1.91 5.09 2032 4.20 2.52 6.72 2042 5.97 3.18 9.15

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ii. Trip Length Distribution

The trip length distribution has been taken on the basis of the available details on land use, corridor composition and existing traffic characteristics in the catchment areas of various sections of the corridor. Average trip length on the corridor is about 7.7 km. The trip length distribution is given in Table 13.24 and Figure 13.1.

TABLE 13.24: TRIP LENGTH DISTRIBUTION

Trip Length (Km) % Distribution 0‐2 10.3% 2‐4 11.2% 4‐6 19.0% 06 – 09 22.0% 09 – 12 21.8% 12 – 15 9.0% 15 – 18 4.4% 18 – 21 1.0% 21 – 24 1.0% >24 0.3% Total 100%

FIGURE 13.1: EXPECTED TRIP DISTRIBUTION ON THE PROPOSED METRO CORRIDOR

25.0%

20.0%

15.0%

10.0% Series1

5.0%

0.0% 0‐22‐44‐606 – 09 – 12 – 15 – 18 – 21 – >24 09 12 15 18 21 24

Trip length Distribution

iii. Fare Structure

LMRC has proposed a fare structure for Lucknow Metro for the year 2018 with the increase by 10 % every 2nd year (Table 13.25). Same fare structure is being proposed to be adopted for Varanasi Metro also.

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TABLE 13.25: MRTS FARE STRUCTURE FOR VARANASI METRO

Distance Slab (in Km) Year 0‐2 2‐4 4‐6 6‐9 9‐12 12‐15 15‐18 18‐21 21‐24 >24 2018 12 15 18 23 25 28 29 32 34 35 2019 12 15 18 23 25 28 29 32 34 35 2020 13 17 20 25 28 31 32 35 37 39 2021 13 17 20 25 28 31 32 35 37 39 2022 15 18 22 28 30 34 35 39 41 42 2023 15 18 22 28 30 34 35 39 41 42 2024 16 20 24 31 33 37 39 43 45 47 2025 16 20 24 31 33 37 39 43 45 47 2026 18 22 26 34 37 41 42 47 50 51 2027 18 22 26 34 37 41 42 47 50 51 2028 19 24 29 37 40 45 47 52 55 56 2029 19 24 29 37 40 45 47 52 55 56 2030 21 27 32 41 44 50 51 57 60 62 2031 21 27 32 41 44 50 51 57 60 62 2032 23 29 35 45 49 55 57 62 66 68 2033 23 29 35 45 49 55 57 62 66 68 2034 26 32 39 49 54 60 62 69 73 75 2035 26 32 39 49 54 60 62 69 73 75 2036 28 35 42 54 59 66 68 75 80 83 2037 28 35 42 54 59 66 68 75 80 83 2038 31 39 47 60 65 73 75 83 88 91 2039 31 39 47 60 65 73 75 83 88 91 2040 34 43 51 66 71 80 83 91 97 100 2041 34 43 51 66 71 80 83 91 97 100 2042 38 47 56 72 78 88 91 100 107 110 2043 38 47 56 72 78 88 91 100 107 110 2044 41 52 62 79 86 97 100 110 117 121 2045 41 52 62 79 86 97 100 110 117 121 2046 46 57 68 87 95 106 110 122 129 133 2047 46 57 68 87 95 106 110 122 129 133 2048 50 63 75 96 104 117 121 134 142 146 2049 50 63 75 96 104 117 121 134 142 146 2050 55 69 83 106 115 129 133 147 156 161 2051 55 69 83 106 115 129 133 147 156 161 2052 61 76 91 116 126 142 147 162 172 177 2053 61 76 91 116 126 142 147 162 172 177 2054 67 83 100 128 139 156 161 178 189 195 2055 67 83 100 128 139 156 161 178 189 195

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iv. Other sources of revenues

Other sources of revenues considered are the advertisement and limited property development within the stations. It is possible to raise resources through leasing of parking rights at stations, advertisement on trains and tickets, advertisements within stations and parking lots, advertisements on other metro structures, co‐branding rights to corporates, film shootings and special events on metro premises. There could also be some revenue from small kiosks at the stations including those for soft drinks, tea coffee, telecom companies and bank ATM’s. This has been estimated at 10% of the fare box revenues during operations.

13.4.8 Financial Internal Rate of Return The project FIRR with the project costs including only Central taxes and projected revenue has been worked out. Further, the security to Varanasi Metro may be provided through CISF. Though the security cost is included in the Financial analysis, this may be borne by the Government, thereby improving the FIRR to that extent.

Project FIRR for both the corridors combined works out to ‐0.32%. To make the project viable as per MOUD norms, additional sources of revenue would be required to bring the project FIRR >8%. The FIRR calculations are presented in Tables 13.26.

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TABLE 13.26: PROJECT FIRR ‐ COSTS WITH CENTRAL TAXES WITHOUT PROPERTY DEVELOPMENT ( BOTH CORRIDORS) (Rs in Crore) Completion Land Total Total Fare Box Revenue from Gross Additional Operational Year Cost Cost Taxes Completion Cost Revenue Adv & PD Revenue O&M Cost Capital Surplus 2017‐18 588 238 76 902 0.00 0.00 0 -902 2018‐19 1265 238 162 1665 0.00 0.00 0 -1665 2019‐20 2040 262 2301 0.00 0.00 0 -2301 2020‐21 2193 281 2474 0.00 0.00 0 -2474 2021‐22 3143 403 3546 0.00 0.00 0 -3546 2022‐23 4223 542 4765 0.00 0.00 0 0 -4765 2023‐24 1816 233 2049 513 51 565 385 0 -1869 2024‐25 528 53 581 416 0 165 2025‐26 597 60 657 449 0 208 2026‐27 614 61 675 485 0 190 2027‐28 694 69 764 524 0 240 2028‐29 714 71 785 566 0 220 2029‐30 808 81 888 611 0 277 2030‐31 878 88 966 660 263 43 2031‐32 993 99 1092 713 0 379 2032‐33 1021 102 1123 810 0 313 2033‐34 1155 115 1270 875 0 395 2034‐35 1187 119 1306 945 0 361 2035‐36 1343 134 1477 1021 0 456 2036‐37 1381 138 1519 1102 0 416 2037‐38 1562 156 1718 1191 0 527 2038‐39 1606 161 1766 1286 0 480 2039‐40 1816 182 1998 1389 0 608 2040‐41 1924 192 2116 1501 535 81 2041‐42 2183 218 2401 1621 0 779 2042‐43 2116 212 2328 1864 3633 -3170 2043‐44 2398 240 2638 2013 0 624

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Completion Land Total Total Fare Box Revenue from Gross Additional Operational Year Cost Cost Taxes Completion Cost Revenue Adv & PD Revenue O&M Cost Capital Surplus 2044‐45 2470 247 2717 2175 0 542 2045‐46 2798 280 3078 2349 0 729 2046‐47 2882 288 3170 2537 0 633 2047‐48 3265 327 3592 2741 0 851 2048‐49 3363 336 3700 2961 0 739 2049‐50 3811 381 4192 3199 0 993 2050‐51 3925 393 4318 3456 586 275 2051‐52 4447 445 4892 3734 0 1157 2052‐53 4580 458 5039 4267 0 772 2053‐54 5190 519 5709 4609 0 1099 2054‐55 5345 535 5880 4979 0 900 2055‐56 6056 606 6662 5379 0 1282 2056‐57 6238 624 6862 5812 0 1050 2057‐58 7068 707 7774 6279 0 1495 2058‐59 7280 728 8008 6785 0 1223 15267 475 1959 17702 94748 9475 104223 81692 5017 -1411

IRR -0.32%

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a) Value Capture from Real Estate

To make the project financially viable, value capture from real estate has been explored. With the construction of metro, the cost of property/ land along the corridor increases manifolds due to improved connectivity. Varanasi Development Authority may decide to capture the value of real estate along the corridor to fund the project.

UP government vide letter no 03/8‐3‐15‐198 vividh/14 dated 4th March has issued guidelines for development along the transit corridors. As per these guidelines 60% of the total area available with FAR 4 for property development shall be used for commercial activity development and balance 40% shall be used for residential activity development. Estimation of revenue generated from Value capture is based on following assumptions: 1. SPV will engage a developer for generating rental income. The developer will bring equity of 25% and balance amount shall be raised by SPV as market debt. 2. The Development shall include both residential and commercial properties. Residential properties will be for outright sale whereas commercial properties will be given on rental basis. 3. For estimating revenue from property development, rental and sale rates for commercial and residential properties have been worked out based on Circle Rates of Varanasi. The rates assumed are Rs 30000/ sq mt for outright sale of residential properties and Rs.400 /sq mt/ month as the rental rates for commercial properties. 4. Return to the developer: 14% 5. Lease rental rate would increase @ 5% every year. 6. The rate of interest for market debt will be 12%.

Possibility of property development along the MRTS corridors was explored with city authorities in detail. Total 5 locations with plot area of 3.4 hectares have been identified along the corridors for property development. As per GoUP guidelines on TOD, property development @ 4 FAR has been assumed at these locations. Moreover, property development over MRTS depot( on 12 hectares out of total of 15 Hectares of land ) has also been assumed @ 3 FAR. Total of 4.97 Lakh Sq meters of space has been identified for property development. Based on above assumptions, the total cost of the property development will be Rs 1127 Crore. The developer will bring equity of Rs 282 Crore (25%) and balance Rs 845 Crore ( 75%) would be raised from market. the rental income will accrue from the year 2023‐2024 which has been escalated @5% every year. Out of the estimated rental income, the developer will bear the maintenance expenditure, will repay the loan and interest. after meeting these obligations and retaining 14% return on his equity the residual rental earning will accrue to SPV. Escalation of 5% has been assumed on these calculations. These earnings from PD have been taken into account in FIRR calculations. The details of income from property development is given in Table 13.27.

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TABLE 13.27: ESTIMATED RENTAL INCOME FROM PROPERTY DEVELOPMENT (Rs. in Crore)

Constr Total Loan Balance Residual Rental Inter Return Year uction O&M Debt IDC Loan Repay Loan Income to Income est @ 14% Costs Payment ment Amount SPV 17 ‐ 18 166 124 124 ‐47 18 ‐ 19 174 130 15 145 ‐47 19 ‐ 20 183 137 31 168 ‐47 20 ‐ 21 192 144 47 191 ‐47 21 ‐ 22 201 151 64 215 ‐47 22 ‐ 23 211 159 82 241 ‐47 23 ‐ 24 652 65 101 101 119 1067 12 39 417 24 ‐ 25 663 66 119 949 128 41 308 25 ‐ 26 233 23 119 830 114 43 ‐66 26 ‐ 27 245 24 119 711 100 46 ‐43 27 ‐ 28 257 26 119 593 85 48 ‐21 28 ‐ 29 270 27 119 474 71 50 3 29 ‐ 30 283 28 119 356 57 53 27 30 ‐ 31 298 30 119 237 43 55 51 31 ‐ 32 312 31 119 119 28 58 76 32 ‐ 33 328 33 119 0 14 61 101 33 ‐ 34 344 34 64 246 34 ‐ 35 362 36 67 258 35 ‐ 36 380 38 71 271 36 ‐ 37 399 40 74 285 37 ‐ 38 419 42 78 299 38 ‐ 39 440 44 82 314 39 ‐ 40 462 46 86 329 40 ‐ 41 485 48 90 346 41 ‐ 42 509 51 95 363 42 ‐ 43 534 53 100 381 43 ‐ 44 561 56 105 400 44 ‐ 45 589 59 110 420 45 ‐ 46 619 62 115 441 46 ‐ 47 650 65 121 463 47 ‐ 48 682 68 127 487 48 ‐ 49 716 72 134 511 49 ‐ 50 752 75 140 537 50 ‐ 51 790 79 147 563 51 ‐ 52 829 83 155 592 52 ‐ 53 870 87 162 621 53 ‐ 54 914 91 170 652 54 ‐ 55 960 96 179 685 55 ‐ 56 1008 101 188 719 56 ‐ 57 1058 106 197 755 57 ‐ 58 1111 111 207 793

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v. Total Revenue

The total annual revenue through the fare box , property development and other sources for the study corridors is given in Table 13.28.

TABLE 13.28: TOTAL REVENUE COLLECTION (Rs. in Crore)

Source of Revenue 2021 2031 2041 Fare Box Revenue 513 993 2183 Revenue from other Sources 51 99 218 Revenue from Real Estate 417 246 400 Total Revenue 982 1338 2801

13.4.9 Financial Internal Rate of Return

The project FIRR with the project costs including only Central taxes and property development has been worked out. The FIRR of the project with limited identified property development improves from ‐0.32% to 1.94 %.

To make the project viable as per MOUD norms, additional PD of 35 lakh sq mts (about 75 Ha land) would be required to bring the project FIRR at 8.12%.

The issue of availability of government land required to increase project FIRR was discussed with city authorities and it was communicated that Varanasi being a old city and availability of government land of this magnitude is not available.

Varanasi is a heritage city and attracts lot of international tourist throughout the year. Considering the importance of the city, the provision of the good infrastructure facilities becomes the responsibility of both the state and central governments. To further improve project FIRR , it is proposed that both state and central governments each give 10% of the project cost as grant to the project ( total 20%). This would be in addition to equity contribution of both the governments.

With Grant scenario, The FIRR of the project without property development improves from ‐0.32% to 0.53 % and with property development of approximately 5 Lakh sq mts on identified land along the corridor, the project IRR becomes improves from 1.94 % to 2.86%.

13.4.10 Conclusions As per MOUD circular no K‐14011/1/2007‐UT‐IV dated 30th August 2013, FIRR of about 8% is required for an Urban Mass Transit project. Varanasi MRTS project however, cannot support itself and shall require Govt. support for implementation. With limited property development and support from both state and central Governments, the project has positive FIRR of 2.86%. Considering the special status of Varanasi city as heritage city and the need

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of the city to have fast efficient mass transport system, it is recommended that the condition of 8% FIRR may be relaxed and project is approved for implementation.

The FIRR calculations are presented in Tables 13.29.

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TABLE 13.29: PROJECT FIRR BOTH CORRIDORS ‐ WITH PROPERTY DEVELOPMENT & GRANT FROM STATE AND CENTRRAL GOVERNMENTS (Rs in Crore)

Completion Land Total Total Fare Box Revenue from Additional Gross Additional Operational Year O&M Cost Cost Cost Taxes Completion Cost Revenue Adv & PD Revenue Revenue Capital Surplus

2016‐17 471 238 60 769 0.00 0.00 0 -769 2017‐18 1012 238 130 1380 0.00 0.00 0 -1380 2018‐19 1632 209 1841 0.00 0.00 0 -1841 2019‐20 1754 225 1979 0.00 0.00 0 -1979 2020‐21 2514 323 2837 0.00 0.00 0 -2837 2021‐22 3378 434 3812 0.00 0.00 0 -3812 2022‐23 1453 186 1639 -1639 2023‐24 513 51 417 982 385 0 596 2024‐25 528 53 308 889 416 0 473 2025‐26 597 60 -66 591 449 0 142 2026‐27 614 61 -43 632 485 0 147 2027‐28 694 69 -21 743 524 0 220 2028‐29 714 71 3 788 566 0 223 2029‐30 808 81 27 915 611 0 304 2030‐31 878 88 51 1017 660 0 357 2031‐32 993 99 76 1168 713 263 192 2032‐33 1021 102 101 1224 810 0 414 2033‐34 1155 115 246 1516 875 0 641 2034‐35 1187 119 258 1564 945 0 619 2035‐36 1343 134 271 1748 1021 0 727 2036‐37 1381 138 285 1803 1102 0 701 2037‐38 1562 156 299 2016 1191 0 826 2038‐39 1606 161 314 2080 1286 0 794 2039‐40 1816 182 329 2327 1389 0 938 2040‐41 1924 192 346 2462 1501 0 961 2041‐42 2183 218 363 2764 1621 535 608

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Completion Land Total Total Fare Box Revenue from Additional Gross Additional Operational Year O&M Cost Cost Cost Taxes Completion Cost Revenue Adv & PD Revenue Revenue Capital Surplus

2042‐43 2116 212 381 2709 1864 0 845 2043‐44 2398 240 400 3038 2013 3633 -2609 2044‐45 2470 247 420 3137 2175 0 962 2045‐46 2798 280 441 3519 2349 0 1170 2046‐47 2882 288 463 3634 2537 0 1096 2047‐48 3265 327 487 4079 2741 0 1338 2048‐49 3363 336 511 4211 2961 0 1250 2049‐50 3811 381 537 4728 3199 0 1529 2050‐51 3925 393 563 4881 3456 0 1425 2051‐52 4447 445 592 5483 3734 586 1163 2052‐53 4580 458 621 5660 4267 0 1393 2053‐54 5190 519 652 6361 4609 0 1751 2054‐55 5345 535 685 6565 4979 0 1585 2055‐56 6056 606 719 7381 5379 0 2001 2056‐57 6238 624 755 7617 5812 0 1805 7068 707 793 8567 6279 0 2288 7280 728 1050 9058 6785 0 2273 12214 475 1568 14257 87468 8747 13633 117856 81692 5017 14617 IRR % 2.86

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13.5 FUNDING OPTIONS

Metro Rail Projects are highly capital intensive with long gestation period. Given the tariff constraints, they are not commercially attractive for investment. However, the MRTS project have immense economic benefits to the society.

Experience all over the world reveals that both construction and operations of a metro are highly subsidized and funded by the Government. Singapore had a 100% capital contribution from the government, Hong Kong 78% for the first three lines and 66% for the subsequent 2 lines. Others run on Governmental support and subsidies. In India also the Phase‐I, Phase‐II and Phase III of Delhi MRTS , Chennai, Bangalore Metros systems have been funded with a mixture of equity and debt (ODA) by GOI and state governments. Thus, the involvement of Government in the funding metro systems is foregone conclusion.

If commercial capital city of Utter Pradesh is to have Metro System on self sustainable basis, it is necessary to keep down the capital cost as much as possible by way of giving government land as grant /exempting taxes for the project and also required funding is made available from the Government sources.

13.6 FINANCING MODELS ADOPTED IN INDIAN CITIES

The financing options depends on the selection of the dedicated agency created to implemented to implement the project. Number of Indian cities have operational /under construction MRTS system. Different financing models have been adopted for financing of the MRTS system. These include

 Government Funding  Special Purpose Vehicle (SPV) under the State Government Control  Public Private Partnership  Private sector

SPV model is the most successful model of metro funding and has been adopted in most cities. Subsequent paragraphs discuss the Indian experience of MRTS funding.

13.6.1 Government Funding As the name suggests, this funding model involves the complete funding of the metro system by Central/State Government. Metro Railway, Kolkata has been funded on this model. It is the first underground Metro Railway in India. The Metro Railway Kolkata was constructed progressively from 1972 to 1995 by the Indian Railways who also operate the system on a highly subsidized fare. The Metro Corridor has since been extended from Tolly Ganj to Garia. Due to capital intensive nature of the metro systems and financial constraints faced by the government, no metro system has been planned on this model after Metro Rail Kolkata.

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13.6.2 SPV with Joint Venture Between GOI & State Govt Under SPV pattern of financing pattern, a Special Purpose Vehicle (SPV) is set up as a joint venture between Central Government and State Government for the implementation of the project and for its subsequent Operation & Maintenance. Under this arrangement Government of India and State Government make equal equity contribution and run SPV as a commercial enterprise. As per the prevalent practice, Central Government contribute 20% of the project cost as their equity contribution. An equal amount can be contributed by State Government aggregating the total equity to 40%. Remaining 60% is arranged as soft loan from funding agencies. Delhi Metro Rail Corporation, Bangalore Metro Rail Corporation, Chennai Metro Rail Corporation & Kolkata Metro Rail Corporation are some of the examples of success of such a SPV. Subsequent parVaranasiphs give the details of the financial models of these MRTS system.

Kolkata Metro (East West Corridor)

Kolkata Metro Rail Corporation formed as a Joint Venture between GOI & West Bengal State Government with equal equity contribution by these two governments for construction of 13.77 KMs of metro. Out of the estimated total cost of Rs. 4676 crore, 55% has been funded by GOI & GOWB and the balance 45% is being contributed by JICA ODA Loan. The construction works are under progress. The approved funding pattern of the line is depicted in Figure13.2.

FIGURE 13.2: FUNDING PATTERN OF KOLKATA METRO

Delhi Metro

Delhi Metro Rail Corporation was established in 1995 to construct metro rail system in the capital city. The company was formed as a Joint Venture between GOI & GNCTD with equal equity contribution by these two governments. The first phase covering 65.1 KMs route length was commissioned in a phased manner. About 60% of the project was funded by Japanese ODA loan through JICA. The balance cost was contributed by GOI & GNCTD as equity and subordinate debt apart from raising funds from Property Development. The second phase of DMRTS project covering a distance of 82.11 KMs within the Delhi Area has

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also been funded by both the governments in the same pattern with JICA funding of 46% and raising of part funding from Property Development and internal accruals.

The extension to National Capital Regions (NCR) viz., Noida, Gurgaon and Vaishali are also been undertaken by DMRC as a deposit work with the entire cost other than Rolling Stock being contributed by these states.

Delhi Metro Phase III network is of 103.5 Km is expected to cost Rs 35242 Crore and is being implemented with loans from JICA. The funding pattern of Delhi Metro Phase‐I, II and Phase ‐ III is depicted in Figure 13.3,13.4, & 13.5.

FIGURE 13.3: FUNDING PATTERN OF DELHI METRO PHASE I

FIGURE 13.4: FUNDING PATTERN OF DELHI METRO PHASE II

FIGURE 13.5: FUNDING PATTERN OF DELHI METRO PHASE III

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Bangalore Metro Bangalore Metro Rail Corporation has been formed as a Joint Venture between GOI & Karnataka State Government with equal equity contribution by these two governments for construction of 33 KM of metro. Out of the estimated total cost of Rs. 6395 Crore, 55% has been funded by GOI & GOKN and the balance 45% is being raised as senior debt including JICA ODA Loan. First Phase of project has started operation recently. The state Government has already enacted a law to charge Rs. 2 a litre on diesel and petrol sold in the city of Bangalore for raising the funds required for Metro Project. The approved funding pattern of the line is depicted in Figure 13. 6.

FIGURE 13.6: FUNDING PATTERN OF BANGALORE METRO

Chennai Metro Chennai Metro Rail Corporation has been formed as a Joint Venture between GOI & Tamilnadu State Government with equal equity contribution by these two governments for construction of 45.046 KM of metro. Out of the estimated total cost of Rs. 14600 Crore, 40.78% has been funded by GOI & GOTN and the balance 59.22% is being contributed by JICA ODA Loan. The construction works of Phase‐I project is under progress. The approved funding pattern of the line is depicted in Figure 13.7.

FIGURE 13.7: FUNDING PATTERN OF CHENNAI METRO

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13.6.3 Public Private Partnership This model of MRTS finding involves the private sector participation on different models. In this model , the private firm will be responsible for financing designing, building, operating and maintaining the entire project. The contribution of the government is generally limited to cost of land only. Under Viability gap Funding(VGF) scheme of Central Government for infrastructure projects, MRTS project is eligible for VGF up to 20% from the Central Government provided the state government also contributes same or more funds towards the project. The metro being a social sector project not much private companies are available to bid for such a project. Besides, the private operator expects assured rate of return in the range of 16‐18% or a comfort of guaranteed ridership.

However, In spite of the constraints of this funding model, Airport Line of Delhi Metro, Mumbai Line 1&2, and Hyderabad MRTS have adopted this model for financing their metro systems. Subsequent parVaranasiphs give the details of the financial models of these MRTS system.

Delhi Airport Line under PPP Model

DMRC has implemented a High Speed Airport Link from New Delhi Railway Station to IGI Airport and further extension to Sector‐21, Dwarka covering a distance of 22.7 KM with private sector participation. The project with an estimated cost of Rs. 3869 Crore has been implemented under a unique model of PPP where in the DMRC has undertaken the civil works with the funds being contributed by GOI, GNCTD, Delhi International Airport Limited and DDA (54%) and the cost of systems and Rolling Stock (46%) is being met by the private operator who will operate the system for 30 years, after which the system will revert back to DMRC. The approved funding pattern of the line is depicted in Figure 13.8.

There have been some issues with the concessionaire and DMRC is now operating the system.

FIGURE 13.8: FUNDING PATTERN OF AIRPORT LINE

Mumbai Metro Line 1 & 2 In contrast to the SPV model adopted for construction of metro rail system in the city of Delhi, Bangalore, Chennai & Kolkata, the Maharashtra government has opted Build Own, Operate & Transfer (BOOT) model in the city of Mumbai. So far, 2 lines covering a distance of

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44 KMs (Line 1 of 11.07 KMs from Versova – Andheri ‐ Ghatkopar with a total cost of Rs. 2356 crore and Line 2 of 32 KMs from Charkop – Bandra – Mankurd with an estimated cost of Rs. 8250 crore) have been awarded to private operator for construction and operation by giving Viability Gap Funding by GOI & Maharashtra State Government to the extent of Rs. 650 crore and Rs. 1532 crore for Line 1 & Line 2 respectively.

Mumbai Metro One Private Limited is a Joint Venture Company formed by Reliance Energy Limited, a Reliance ADA Group Company, Veolia Transport, France and Mumbai Metropolitan Region Development Authority (MMRDA) incorporated under the Companies Act, 1956 to implement this project. Figure 13.9 gives the funding pattern of Mumbai Metro Line 1.

Line 1 is now operational. There are some issues with the concessionaire and the implementation mechanism for Line 2 is being revisited.

FIGURE 13.9: FUNDING PATTERN OF MUMBAI METRO LINE 1

Hyderabad Metro

Hyderabad Metro is the first PPP Metro Rail Project that has been sanctioned by Government of India. GoAP has undertaken the Hyderabad Metro Rail Project under Viability Gap Funding (VGF) scheme of GoI. The MRTS network include three high density traffic corridors with total length of about 71 km. The Project is being executed by L&T on design, build, and finance, operate and transfer (DBFOT) basis. GoAP will spend another 1,980 Crore towards land acquisition, R&R package, shifting of utilities and GOI will support the project with grant of 1,458 Crore as VGF. Figure 13.10 gives the funding plan of Hyderabad metro. FIGURE 13.10: FUNDING PATTERN OF HYDERABAD METRO

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13.6.4 Private Sector Gurgaon's Rapid Metro project is India’s first fully privately financed metro. With the project cost of Rs 1100 crore, it has a network of 5.1 km connecting Cyber City, NH‐8 & Sikanderpur station (DMRC) in Phase I. The planned route for Rapid Metro acts as a feeder to the MRC’s Jahangirpuri‐Central Secretariat‐HUDA City Centre (Yellow Line). A special purpose vehicle (SPV), Rapid Metro Rail Gurgaon Limited (RMGL) was formed to construct, operate and maintain the metro.

The Indian experience of Metro Rail projects funding suggests that those implemented on SPV model have been more successful than those implemented with private sector participation. Under SPV model, extensive government funding support is required either directly as equity and subordinate debt or through government guaranteed Japanese ODA loan from JICA. Accordingly, SPV model for funding of Varanasi MRTS is being proposed.

13.7 FINANCING OPTIONS FOR VARANASI MRTS

13.7.1 Equity Under DMRC/BMRC pattern of financing pattern, a Special Purpose Vehicle (SPV) will be set up for the implementation of the project and for its subsequent Operation & Maintenance. Under this arrangement Government of India and Government of Utter Pradesh (GoUP) shall make equal contribution and run SPV as a commercial enterprise. As per the prevalent practice, Central Government may be willing to contribute 20% of the project cost as their equity contribution. An equal amount can be contributed by GoUP aggregating the total equity to 40%. For the balance 60% funding requirement, options available are as follows: ‐

13.7.2 Debt

The balance cost can be met through loans from various bilateral partners, Local borrowing, loans from ADB/World Bank and Suppliers Credit.

Official Development Assistance from Bilateral Partners : ‐ Department of Economic affairs, Ministry of Finance, Government of India has issued policy guidelines no 3/11/2015‐PMU on official Development Assistance for development cooperation with bilateral partners. This assistance can be availed can be availed of for metro rail projects. The prevailing interest rate is 0.3% p.a. The loan is repayable in 40 years including moratorium period of 10 years. The loan assistance is for the total project cost excluding taxes and land costs. The loan is provided to Central Government which in turn releases the same to SPV under a Pass Through Assistance (PTA) mechanism.

Since the loan is generally in currency of lending country, any fluctuation in exchange rate at the time of repayment are generally borne by the Central Government and GoUP in proportion to which their share holding. The loan in equivalent INR shall be repaid by SPV from the income streams of metro operations.

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Loan from Asian Development Bank (ADB)/World Bank: ‐ The Loan may also be available from ADB/World Bank. As per the information available, the loan from World Bank/ ADB is available to GOI at LIBOR + 2 % per annum. It is considered that the loan shall be passed to project without any additional charges/ administration cost. At present 12 month LIBOR for USD is 0.5%.

Domestic Loan from Banks and Financial Institutions: ‐ Funds can be arranged from Indian Financial Institutions like India Infrastructure Finance Company Limited (IIFCL), India Development Financing Corporation (IDFC), Life Insurance Corporation of India (LIC), State Bank of India, IDBI Bank, ICICI Bank Ltd etc. These institutions are increasingly engaged to fund infrastructure projects subject to their commercial viability. There are many models available under which the funds can be arranged by these financial institutions with or without syndicating with other commercial banks. IIFCL e.g. fund 20% of the project cost and arrange balance through the syndication of commercial banks with a lead banker among the consortium of bankers. The loan can be given for a period of 20‐30 years with interest rate ranging from 9.50% to 12% PA. The funding arrangement may require submission of central government guarantee as well. Since the rate of interest of these financial institutions is much higher than the interest rates of soft loan provided by JICA, Central Government and GoUP shall have to bear the interest difference and provide subsidy to the SPV.

(ii) Subordinate Debt: ‐ For existing Phase‐I , Phase‐II & Phase III projects of Delhi Metro, land and rehabilitation and resettlement cost have been borne by GOI & GNCTD equally as interest free subordinate debt. This mezzanine financing is of extreme help in quickening the pace of the project. In this project Subordinate debt can be procured to pay back state and central taxes and duties. The loan is of longer duration and becomes repayable only after other loans raised for the project are repaid.

13.7.3 Involvement of the Government

Government contribution is essential to keep debt‐servicing levels low ‐ with a view to maintain overall long term sustainability of the system. Government involvement also generates considerable amount of confidence in other players involved in the process of construction & operation. The capital investment of Varanasi MRTS is estimated to give an economic rate of return to the tune of 15 % and the city/society can recover the investment within 7 to 8 years time. The involvement of Government is very much essential to provide integrated, efficient public transport system in the Varanasi. Apart from financial support, social considerations require the involvement of the government to ensure a minimum essential level of service to the society. The project serving primarily a social purpose/goal, is needed for improving the overall health of the city.

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13.8 PROPOSED FUNDING FOR THE PROJECT

The total cost of the project including central taxes and land at January '2016 has been estimated at Rs 12,350 Crore including Rs 1405 Crore towards Central taxes and duties.

i. Grant by State and Central Governments

Considering the importance of the project, it has been assumed that both state and central governments will give grant to the extent of 10% of the project cost. Accordingly project will receive Rs 1235 Crore as grant with both the governments amounting to Rs 2470 Crore. For remaining cost of Rs 9880 Crore at January'2016 prices, the completion costs works out to Rs 13,781 Crore. Rs 475 Crore of land cost would be extra.

The funding pattern under SPV model would be as under:

ii. Government Contribution

GOI & GOUP to contribute equity of Rs. 5513 Crore which is 40 % of the total completion cost excluding land. This means that both GOI will share 20 % of the total cost amounting to Rs. 2756 Crore which includes Rs 2066 Crore (15%) as equity and Rs 691 Crore ( 5%) as subordinate debt for central taxes. GOUP will also contribute equal amounts towards equity and subordinate debt for central taxes. In addition GOUP will provide subordinate debt of Rs 475 Crore towards land required for the project.

iii. Contribution by Local Bodies

Through means of innovative financing, Local bodies will contribute Rs 200 Crore (1.45%) towards project completion cost

iv. Soft Loans from funding agencies

Remaining project cost of Rs 8069 Crore ( 58.55%) of total completion cost to be funded through soft loans from funding agencies. The proposed loan shall be tied loan with interest rate of .03% and payback period of 40 Years including 10 years of moratorium.

In addition to above state taxes of Rs 343 Cr on completion costs basis for both the corridors has to be reimbursed or exempted by State Government.

Figure 13.11 gives the proposed funding pattern and the Table 13.30 gives the year wise funds requirement from different sources

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FIGURE 13.11: PROPOSED FUNDING PATTERN UNDER SPV MODEL

EQUITY BY GOI

14.99 SD FOR CT BY GOI 5.01 EQUITY BY GUP

14.99 SD FOR CT BY GUP 58.55

CONTRIBUTION BY LOCAL BODIES 5.01 1.45 SOFT LOANS

TABLE 13.30: PROPOSED FINANCING OF PROJECT

(Rs in Cr)

PARTICULARS CORRIDOR 1 CORRIDOR 2 BOTH CORRIDORS AMOUNT % AMOUNT % AMOUNT % Equity by GoI 1396 14.99 670 14.99 2066 14.99 SD for CT by GoI 467 5.01 224 5.01 691 5.01 Equity by Govt of UP 1396 14.99 670 14.99 2066 14.99 SD for CT by Govt of UP 467 5.01 224 5.01 691 5.01 Contribution by Local Bodies 135 1.45 65 1.45 200 1.45 Loan by JICA 5453 58.55 2615 58.55 8069 58.55 Total Cost Excluding Land 9314 100 4467 100 13781 100 SD for land by Govt of UP 438 37 475 GRAND TOTAL 9752 4504 14256

13.8.1 Recommendations With above funding option as per the detail cash flow given in Tables 13.31, it can be seen that with property development the project has positive cash flows. Thus, the project has potential to service its debts liabilities.

It is accordingly recommended that Varanasi MRTS is taken up for implementation.

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TABLE 13.31: CASH FLOW STATEMENT FOR VARANASI MRTS FOR GRANT SCENARIO (Rs in Crore)

Cumulative Project Additional & Net Equity From GOI & Total PD Total Availability Of Loan Loan Cash Cumulative Year Completion O&M Cost Replacement DPRCN Fare box Cash GOUP &Stake Holder Cumulative Cash Cum Loan Loan IDC Interest PBT Costs &ADVT Revenue Cash Repayment Including Balance Cash Cost Capital Flow Contribution IDC 2017‐2018 209 209 ‐209 209 0 0 0 0 2018‐2019 1431 1431 ‐1431 1431 0 0 0 0 2019‐2020 2403 2403 ‐2403 2403 0 0 0 0 2020‐2021 3450 3450 ‐3450 2145 ‐1305 ‐1305 1305 1305 2 1307 2021‐2022 3461 3461 ‐3461 ‐3461 ‐4765 4765 3461 9 4776 2022‐2023 2194 2194 ‐2194 ‐2194 ‐6959 6959 2194 20 6988 2023‐2024 800 385 0 306 1185 513 468 982 ‐204 ‐800 ‐7759 7759 800 7790 21 269 575 575 2024‐2025 310 416 0 326 726 528 361 889 163 ‐310 ‐8069 8069 310 8099 23 123 450 1025 2025‐2026 449 0 315 449 597 ‐6 591 142 ‐8069 8099 24 ‐198 117 1142 2026‐2027 485 0 304 485 614 18 632 147 ‐8069 8099 24 ‐181 123 1265 2027‐2028 524 0 293 524 694 49 743 220 ‐8069 270 7829 24 ‐98 195 1460 2028‐2029 566 0 283 566 714 74 788 223 ‐8069 270 7559 23 ‐84 199 1659 2029‐2030 611 0 273 611 808 107 915 304 ‐8069 270 7289 23 8 281 1941 2030‐2031 660 0 264 660 878 139 1017 357 ‐8069 270 7019 22 71 335 2276 2031‐2032 713 263 254 713 993 175 1168 455 ‐8069 270 6749 21 180 434 2710 2032‐2033 810 0 245 810 1021 203 1224 414 ‐8069 270 6480 20 148 394 3104 2033‐2034 875 0 246 875 1155 361 1516 641 ‐8069 270 6210 19 375 621 3725 2034‐2035 945 0 237 945 1187 377 1564 619 ‐8069 270 5940 19 363 600 4325 2035‐2036 1021 0 229 1021 1343 405 1748 727 ‐8069 270 5670 18 480 709 5035 2036‐2037 1102 0 221 1102 1381 423 1803 701 ‐8069 270 5400 17 463 684 5719 2037‐2038 1191 0 213 1191 1562 455 2016 826 ‐8069 270 5130 16 596 809 6528 2038‐2039 1286 0 206 1286 1606 474 2080 794 ‐8069 270 4860 15 572 778 7306 2039‐2040 1389 0 199 1389 1816 511 2327 938 ‐8069 270 4590 15 724 923 8229 2040‐2041 1501 0 192 1501 1924 538 2462 961 ‐8069 270 4320 14 756 947 9177 2041‐2042 1621 535 185 1621 2183 581 2764 1142 ‐8069 270 4050 13 944 1130 10306 2042‐2043 1864 0 179 1864 2116 593 2709 845 ‐8069 270 3780 12 654 833 11139 2043‐2044 2013 3633 191 2013 2398 640 3038 1025 ‐8069 270 3510 11 822 1013 12153 2044‐2045 2175 0 184 2175 2470 667 3137 962 ‐8069 270 3240 11 768 952 13105 2045‐2046 2349 0 305 2349 2798 721 3519 1170 ‐8069 270 2970 10 856 1161 14265 2046‐2047 2537 0 294 2537 2882 752 3634 1096 ‐8069 270 2700 9 793 1088 15353 2047‐2048 2741 0 284 2741 3265 813 4079 1338 ‐8069 270 2430 8 1045 1330 16682 2048‐2049 2961 0 274 2961 3363 847 4211 1250 ‐8069 270 2160 7 968 1242 17925 2049‐2050 3199 0 265 3199 3811 918 4728 1529 ‐8069 270 1890 6 1258 1523 19448 2050‐2051 3456 0 255 3456 3925 956 4881 1425 ‐8069 270 1620 6 1164 1419 20867 2051‐2052 3734 586 246 3734 4447 1036 5483 1749 ‐8069 270 1350 5 1498 1744 22611 2052‐2053 4267 0 238 4267 4580 1079 5660 1393 ‐8069 270 1080 4 1151 1389 23999 2053‐2054 4609 0 250 4609 5190 1171 6361 1751 ‐8069 270 810 3 1498 1748 25748 2054‐2055 4979 0 241 4979 5345 1219 6565 1585 ‐8069 270 540 2 1342 1583 27330 2055‐2056 5379 0 233 5379 6056 1325 7381 2001 ‐8069 270 270 2 1767 2000 29330 2056‐57 5812 0 225 5812 6238 1379 7617 1805 ‐8069 270 0 1 1579 1804 31134 2057‐58 6279 0 217 6279 7068 1499 8567 2288 2071 2288 33422 2058‐59 6785 0 209 6785 7280 1778 9058 2273 2064 2273 35695

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13.9 IMPLEMENTATION PLAN

13.9.1 Institutional Arrangements Effective institutional arrangements are needed to enable the Metro project to be implemented without any loss of time and cost over‐run. The details of possible arrangements are discussed in following sections.

Setting Up of Special Purpose Vehicle (SPV)

Experience of implementing Delhi Metro project has shown that a Special Purpose Vehicle (SPV), vested with adequate powers, is an effective organizational arrangement to implement and subsequently operate and maintain a metro rail project.

SPV named VMRC (Varanasi Metro Rail Corporation Ltd.) shall be incorporated with the mandate “To establish, Operate and Maintain Guided Urban Transit Systems in and around Varanasi City so as to meet the urban transport needs of Varanasi”. This SPV with a board of directors may implement the Varanasi Metro project.

Metro construction is a very specialized and multi‐disciplinary job. It is therefore, impossible to have a single organizational set up which can be responsible for all aspects of metro implementation, namely investigation, planning, design, drawing up of specifications, preparation of tender documents, fixing of contractors, supervising the contractors’ works, ensuring interface fusion between different contractors, ensuring quality and safety during constructions, planning and supervising integration system trials and getting the project commissioned in time.

It is suggested to have a two tier organization with well‐defined responsibilities for getting this project executed. At the apex will be the VMRC ‐ a lean but effective organization with full mandate and total power – with accountability. The second level will be a project management team called “General Consultants” who will be engaged by the VMRC on contract basis and who will be fully responsible for planning, design and project management. In fact they will be the “Engineers” for the VMRC, who is the “Client”. The detailed design consultants as required may be engaged by General Consultants as their Sub‐ Consultants within their own contract responsibilities. Since most of the alignment length is elevated, it is recommended that the contracts be made on “design and build” basis, based on broad technical specifications and performance requirements drawn up by the G.C.

International Consultants are very expensive and should be engaged only in area where Indian experts cannot manage and they should invariably be part of the General Consultants’ team.

High Power Committee

During the implementation of the project several problems with regard to acquisition of land, diversion of utilities, shifting of structures falling on the project alignment,

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rehabilitation of project affected persons, etc. are likely to arise. For expeditious resolution of these problems, an institutional mechanism needs to be set up at the State Government level. Towards this end, it is recommended that a High Power Committee under the chairmanship of Chief Secretary, Uttar Pradesh should be set up. Other members of this Committee may be the Secretaries of the concerned Departments of the State Government and Heads of civic bodies who will be connected in one way or the other with the implementation of the project. Commissioner, Varanasi and Municipal Commissioner, Varanasi Nagar Nigam should also be the member of this committee.

This Committee should meet once a month and sort out all problems brought before it by VMRC and VDA. For Delhi Metro also, such a High Power Committee was set up and it proved very useful in smooth implementation of the Delhi Metro rail project.

Empowered Committee

At the Central Government level an Empowered Committee, under the chairmanship of Cabinet Secretary, is presently functioning for Delhi Metro project. Other members of this Committee are Secretaries of Planning Commission, Ministry of Home Affairs, Ministry of Urban Development, Ministry of Road Transport and Highways, Ministry of Environment and Forests, Department of Expenditure, Chief Secretary of Delhi Government and a representative from the PMO. The Empowered Committee meets regularly and takes decisions on matters connected with inter‐departmental coordination and overall planning, financing and implementation of the Delhi Metro project.

It is suggested that the role of this Empowered Committee is enlarged to include Varanasi Metro project also and the Chief Secretary, Uttar Pradesh should be inducted as a member of this Committee.

Implementation Schedule

SPV may initiate action for appointment of General Consultants for project management including preparation of tender documents – as soon as the DPR is approved by GoUP and the project is approved for construction. The possible dates of important milestones are given in Table 13.32.

TABLE 13.32: PROJECT IMPLEMENTATION SCHEDULE

S.N. Tasks Timelines

1 Final DPR February, 2016

2 State Government Approval of DPR April, 2016

3 In Principle Approval by GoI July, 2016

4 Appointment of Interim Consultant September, 2016

5 Appointment of DDC for Civil Works September, 2016

6 Packaging and Invitation of Bids for Priority Section* October, 2016

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S.N. Tasks Timelines

7 Final Approval of GoI January, 2017

8 Commencement of Civil Works on Priority Section February, 2017

9 Completion of Project March, 2023

BHEL to Benia Bagh Section of about 15.0 Km shall be taken up on priority for construction.

The commercial operation on Phase‐I corridors may start from March 2023 after providing about 5.5 years for construction and 6 months for safety audit and certification.

13.9.2 Concessions from Government Metro rail projects need very heavy investment. Loans have invariably to be taken to fund a part of the capital cost of the projects. These projects yield low financial internal rate of return though their economic internal rate of return is very high. With reasonable fare levels, servicing of these loans often pose problems. To make the project financially viable, the fares need to be substantially increased to socially un‐acceptable levels. This results in the ridership coming down significantly, as it is sensitive to increases in the fare level. Thus, the very objective of constructing the metro rail system to provide an affordable mode of mass travel for public is defeated. It therefore becomes necessary to keep the initial capital cost of a metro project as low as possible so that the fare level of the metro system can be kept at reasonable level.

Experience of Delhi Metro project has shown that the taxes and duties (including custom duty, Excise Duty, Sales Tax, Taxes on electricity, Municipal Taxes) constitute about 15 – 16% of a metro project cost. VMRC may try to get exemption from these for the implementation of this important infrastructure project.  Custom Duty on all imported rolling stock and other equipment needed for the project.  Excise Duty on all indigenously manufactured rolling stock and other indigenously finished goods required for the project.  Sales Tax on all purchases made for implementation of the project whether directly by the project implementation authority or by the contractors executing the project.  Sales Tax on works contracts to be executed for the implementation of the ‐ project.  Tax on electricity required for operation and maintenance of the metro system.

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 Municipal Taxes.

Further, the transfer of Govt. land required for the project could be considered free of cost or at the most at Govt. rates. The cost of private land could also be recovered through TDRs and higher FARs.

VMRC may consider roping in more stakeholders, who would directly/ indirectly benefit from the system, for partly sharing the cost of metro construction.

Additional taxes due to improved accessibility, higher property rates (as a result of metro availability) may also be considered in the immediate influence area of metro corridor.

13.9.3 Way Forward On acceptance of the Detailed Project Report by VDA, the following action may be initiated for implementing the Varanasi Metro:

 Approval of State Government (Cabinet Approval) to the Detailed Project Report.  Issue of notification for the project and alignment.  The DPR to be forwarded to the Ministry of Urban Development, Planning Commission and Finance Ministry with the request for approving the Metro project and for financial participation through equity contribution to the SPV.  Land acquisition related issues.  Examination and appraisal of DPR by bilateral/multilateral funding agencies for possible funding.  Stakeholder consultation on environmental and social impact of the project.  Signing of an MOU between Uttar Pradesh State Government and Government of India. giving all details of the Joint Venture bringing out the financial involvement of each party, liability for the loans raised, the administrative control in the SPV, policy in regard to fare structure etc.  Loan approval  Set up the Special Purpose Vehicle (SPV) VMRC (Varanasi Metro Rail Corporation Ltd.) for implementing the project and for its subsequent Operation and Maintenance.  Appointment of General Consultants (G.C.) for the project.  Providing legal cover for construction as well as O&M stages of the project.  Agreement between the State and Central Government for financing the debt portion of the project along with the setting up of time frame for completing the project.  Packaging and invitation of bids for various contracts.

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