Court stays works on Hyderabad Metro Rail corridor

Reprimands government for realigning the route without consulting the public

By M Suchitra
Published: Saturday 19 March 2011

Coming down heavily on the state government and the Hyderabad Metro Rail Limited (HMRL), the Andhra Pradesh High Court on March 15, stayed all works on a stretch of corridor three of the project. The court observed that the metro rail project was kept away from public scrutiny, and the government was violating its own laws. HMRL, a public enterprise, is executing a mega Metro Rail project in the state capital under public-private partnership (PPP) considered one of the biggest in the country.

Cost goes up

Even before the work began, the cost has more than doubled in three years during 2005-2008 from about Rs 6,000 crore to Rs 12,000 crore. In 2008, the metro rail authorities claimed in the high court that the delay will cause an additional expenditure of Rs 3.2 crore per day.

Accordingly the project cost increased by Rs 2,179 crore between September 2008 and September 2010. When the cost of Rs 1,980 crore that the government wants to spend on land acquisition and compensation is added, the total cost of the project rises to Rs 16,496 crore from Rs 12,132 crore.

This is likely to further increase by at least 30 per cent by the time the project is complete. The total project cost may thus cross Rs 18,000 crore.

(Source: CBPTH report)

The court was hearing a bunch of writ petitions filed by Joint Action Committee—a group formed by residents of five localities—Greenlands, Ameerpet, Madhurnagar, Yusufguda, Sri Krishna Nagar—and 20 local traders who would be affected by a realignment in the route of corridor three. The corridor is a 27 km stretch from Nagole to Shilparamam. The petitioners argued that even as their houses, shops and other buildings would have to be demolished, the authorities did not consult them while realigning the route. No technical evaluation was done in connection with the change of route, they pointed out.

“A scheme which involves transfer of vast extents of government land, acquisition of large-scale public and private properties, and dislocation of road transport system for a considerable time cannot take place without consulting the public,” remarked Justice L Narasimha Reddy who issued the interim order staying the work. The court noted that HMRL is appeared to have immunised itself from any objections from the public. “Unfortunately, the state government, in its eagerness to spread red carpet for a private agency has chosen to violate and break laws enacted by itself,” the judge added.

Largest infrastructure project

The Rs 12,132 crore HMR project (the cost has now gone up to Rs 16,496 crore. See box ‘Cost goes up’) is the largest infrastructure project ever undertaken in the history of Hyderabad. It comprises of three routes of total length of 71.16 kilometres. The entire project is an elevated corridor with two parallel tracks of rails and 66 ultra-modern Metro stations. The elevated tracks will be at a height of 10 to 15 metres at some places it might go 18 to 21 metres high. Mega shopping complexes and malls are also expected to come up at many of the stations.

Agreement favours L&T
  A 2010 report by Ramachandraiah pointed out a glaring and blatant pro-private party clause in the concession agreement. The clause allowed extension of lease period if the actual traffic falls short of the estimated figures. For example, if the actual traffic falls short by one per cent of the estimated figures, the concession period can be extended by 1.5 percent of the lease period (35 years) to a maximum of 20 per cent (seven years).

The estimated traffic figure by the authorities for October 1, 2021 is 2.75 crore passenger kilometres which comes to around 2.67 million passengers per day. Going by the logic, the estimated traffic after three years should be higher but the estimated traffic figure for 2024 is 2.2 million.

The study points out the actual traffic for a particular date shall be derived by traffic sampling which should be done one year before for a continuous period of seven days during anytime within 15 days prior to the specified date and the average will be estimated as the actual figure.

The study says there is no scientific basis for estimating these traffic figures. “It is a well-known fact that even after seven years the Delhi metro is not carrying even 30 per cent of the projected ridership. Are the government authorities so innocent that they are not aware of these issues,” asks the report. The lease period of 35 years will automatically be extended to 41 years with this clause. Besides, there is normal renewal of 25 years. “For about 67-70 years the city’s transport destiny will be in the hands of a private company,” states the report.
The state government entered into a concession agreement in September 2010 with L&T Metro Rail (Hyderabad) Private Limited, a special purpose company floated by Larsen & Toubro (L&T), an infrastructure major and private party in the project. Of the total investment for the project, the governments’ share is 40 per cent. The project will be executed on a design, build, finance, operate and transfer (DBFOT) basis. The first phase of the project ( construction of three corridors) is targeted to be completed by December 2014. The estimated traffic demand is likely to be about 1.5 million passengers per day in 2014 and 2.2 million by 2024.

As per the agreement, the private party will get 109 hectare (ha) of land in Hyderabad and can undertake real estate development up to 1.71 million square metre in the allotted land. Local taxes will not be levied on the real estate development. The concession period for the project is 35 years which includes a five-year-construction period and 30-year-operation period with a provision of extension for another 25 years.

Why the resistance?
Ever since the HMR project was proposed there has been a strong resistance against it from the civil rights groups, traders, local residents and political parties. The project which is being implemented without conducting a detailed environmental and social impact assessment, will result in large-scale demolition including a number of heritage buildings and old and pedestrian shopping centres, they point out. Most of the areas where construction of the stations is planned are high-density residential areas where lakhs of middle class and poor live. Besides, the Metro could pose security concerns as it passes beside the Assembly premises, the office of the Director General of Police and parade grounds.

Among the land allotted for the project, 23 ha scattered over 33 localities are prime lands worth thousands of crores of rupees. Further, many of these properties currently belong to the government agencies and are providing services like health, transport, police and municipal care. The project will take away at least 4.8 ha belonging to the Greater Hyderabad Municipal Corporation (GHMC). It also includes 6 ha of Osmania University land.

Even though this is the largest infrastructure project in the city’s history, there has never been a public debate before the contract was granted. According to activists of Citizens for a Better Public Transportation in Hyderabad (CBPTH), a civil society organisation which has studied the project in details and is actively campaigning against it, the basic documents of the project have never been made available to the public despite several efforts made by civil society groups, intellectuals and political parties.
“The project has all the characteristics of a scam, and is pushed by private interests,” points out C Ramachandraiah, a staunch activist and professor at the Hyderabad-based Centre for Economic and Social Studies (CESS). This is more of a real-estate project than a public transportation project, he adds.

Some of the clauses in the concession agreement strengthen his argument. The definition of rail system in the agreement includes rail-related infrastructure and also real-estate development (RED).  If the government fails to make the earmarked land available to the private party in the PPP, then it is bound to give alternative sites of comparable size for RED.

The project has been taken up under the Andhra Pradesh Municipal Tramways (Construction, Operation and Maintenance) Act 2008, which was hurriedly pushed as an ordinance by the government to give legal cover to the Metro project. The law empowers the state government to take up Metro rail projects in the municipal areas of the state either as government projects or as PPP projects through concession agreements. Further, section 17 (2) of this Act empowers the tramway operator to acquire, hold and dispose of all kinds of properties, movable as well as immovable.

The high court observed that the authorities failed to follow the prescribed procedures. The court rejected the government’s plea that there was no need for public notification of the project. “Section 3 and 4 which are enacted to protect the public interest are non- negotiable,” the court said.

As per section 3 and 4 of this legislation, the state government should publish an order or notice inviting objections and suggestions from the public regarding each project and publish a final notification after duly taking these objections and suggestions into consideration.
While delivering the order, the judge did not forget to remind the state government of how in a “similar clandestine manner” it signed a concession agreement in 2008 in the first bidding with a consortium of four companies led by Maytas, the real estate firm of the then information technology major Satyam Computers, “keeping the entire project away from public scrutiny.” This selection had led to the state government’s parting ways with E Sreedharan, its own consultant on Metro rail project and director of Delhi Metro Rail Corporation (DMRC). Finally the government had to scrap the contract as Maytas could not achieve financial closure on the stipulated date, and L&T was selected as the private party for the project.

“At least when its (state government) decision turned out to be a blunder it ought to have been careful and followed the procedure prescribed under the relevant provision of law,” the court observed.

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