Underground metro project cost rises by almost 50%

After starting the process of analysing financial bids for the underground Colaba-Bandra-SEEPZ line, the Mumbai Metro Rail Corporation (MMRC) officials realised that the project cost has increased by almost 50 per cent.

The estimated cost for the project was Rs23,136 crore and Japanese International Cooperation Agency (JICA) was funding 57.2 per cent of it. The hike in the cost is mainly in the civil construction works, which are yet to be formally awarded. "There is some increase in the project cost," shared a state bureaucrat.

In order to construct the 33.5-km metro line from Colaba to SEEPZ, civil bids have been divided into seven packages. Lowest bidders, too, have been found. "There will be negotiations with the firms, followed by getting approval from MMRC and JICA boards to officially award the contract for all seven packages.

Of the entire estimated project cost, the civil work itself was earlier estimated to cost around Rs10,188 crore, without taxes. Now when the financial bids have been opened, the civil construction cost has gone to almost around Rs15,000 crore, which is close to a 50 per cent increase. Not every package has such high variation. The hike in cost ranges from 30-50 per cent.

The amount of Rs23,136 crore was arrived at after an evaluation in September 2011. Several parameters have changed since then. The reasons for the hike include fluctuation in rupee-dollar value, which was Rs45 then and Rs65 now. Also, service tax has increased from 10.3 per cent in 2011 to the present 14 per cent. The third aspect is the change in the Deemed Export category list by the Directorate General of Foreign Trade, which has affected procurement of material for metro rails in India.

In some relief for the state authorities, however, there is a possibility of getting additional funds over and above the JICA loan. As per the schedule chalked out earlier this year, the work order for civil construction work was to be awarded by mid-September. It was rescheduled to October-end and is likely to be awarded by end of November now.