The annual cost escalation of Delhi Metro ’s Phase IV project has been brought down from 7.5% to 5%.

Delhi Metro Phase IV: The annual cost escalation of Delhi Metro’s Phase IV project has been brought down from 7.5% to 5% on the push of Central government, not the Delhi government, said official documents, according to an IE report. After the Union Ministry wrote to DMRC (Delhi Metro Rail Corporation) on October 27, 2016, directing that all Metro rail projects will be based on an escalation factor of 5%, the Detailed Project Report (DPR) of Phase IV project was revised by the Delhi Metro. Last year in January, the government of Delhi after giving in-principle approval to the metro project, urged the corporation to explore the possibility of working out the completion cost of the Phase IV project based on an escalation factor of 5% to 6% instead of 7.50%.

In the month of July, under the new GST regime, the then Delhi Chief Secretary had sought clarity from DMRC on the distribution of taxes. The metro corporation had written back, stating that the government’s Cabinet note was based on the DPR, which was submitted in the year 2014 and not the revised one. The DMRC wrote back that based on the comments received from the Ministry of Urban Development, the DPR was revised. The ministry desired that all projects by Delhi Metro should make the provision of general charges in their cost at 5% and also only 5% escalation will be considered to arrive at the completion cost as against any norms earlier. Therefore, taking the 5% escalation into account, a Cabinet note was prepared accordingly. The project cost had come down from Rs 55,208 crore to Rs 52,625 crore. Moreover, the cost has further reduced to Rs 45,603 crore in the latest Cabinet note.

On comparing the distribution of funds in Cabinet note of 2017 and the latest one, it is clear that the reduction is mainly due to a drop in the share of subordinate debt for taxes of both the Centre and Delhi, and the pass-through assistance from the Central government against loan from Japan International Cooperation Agency. Another thing to note is that in the new funding pattern, Rs 1,963 crore will come through PPP agreements that the metro corporation will enter into, under the Metro Rail Policy of 2017, the report said.

It is being expected that the Delhi government will clear the Phase IV project this week, under which six new corridors measuring over 103 km will come up. The first DPR of the Phase IV project was submitted by DMRC to the government way back in 2014.