FINANCING URBAN TRANSPORT INFRASTRUCTURE: INDIA

Presentation Structure Urban Scenario Investment Needs Financing Structure Financing Options 18-09-2018 MoUD, India

Urban Scenario 18-09-2018 MoUD, India

Rapid Rate of Urbanization Urban population in India increased from 62 million in 1951 to 377 million in 2011. In 2011, 3 cities with a population greater than 10 million and 53 cities with a population greater than 1 million. By 2031, it is projected that there will be 6 cities with a population greater than 10 million. 18-09-2018 MoUD, India

Rapid Motorization From 2001 to 2011, the annual growth of population 1.6%, but FOR motor vehicles, almost 10% Average vehicle speed during peak hours is often as low as 10 kmph 18-09-2018 MoUD, India Source: Road Transport Year Book (2009-2010 &2010 2011). Ministry Of Road Transport & Highways Government Of India New Delhi . IIHS 2011. “Urban India 2011: Evidence”

“Urban transport is the single most important component instrumental in shaping urban development and urban living.” National Commission on Urbanization (NCU) 18-09-2018 MoUD, India

Investment Needs 18-09-2018 MoUD, India

Total for all Urban Services For Transport Infrastructure Investment Needs – Next 20 years Study Total for all Urban Services For Transport Infrastructure Mckinsey Global Institute (2007) US$ 1 Trillion 51% Expert Committee (HPEC) 2011 USD 0.8 Trn 56% 18-09-2018 MoUD, India

Key Issues ImpactingInvestment In Urban Transport High Capital and Operation cost Long Gestation Period Project Viability Cost Recovery: User Charge / Fare Revision Demand Risk Social Linkages Macro economic issues 18-09-2018 MoUD, India

Financing Structure 18-09-2018 MoUD, India

Financing Structure Grnats from National Govt: 50% State Funds: 40% City Level: 10% 18-09-2018 MoUD, India

Current Goals Augment Public Transport (PT) Capacity building of States & Cities Create walking & Cycling facilities (NMT) Improve accessibility for mobility Improve road safety Use technology for multimodal integration, safety etc. Promote research in guided transport 18-09-2018 MoUD, India

Financing Options 18-09-2018 MoUD, India

Financing options Public Financing Schemes Private Sector Investments Multilateral Investments Innovative Financing Mechanisms Financing Sources 18-09-2018 MoUD, India

Central Schemes Jawaharlal Nehru National Urban Renewal Mission (JnNURM) Urban infrastructure Development Scheme for Small & Medium Towns (UIDSSMT) Viability Gap Funding (VGF) Central Assistance for Technical Studies like CMP, DPRs 18-09-2018 MoUD, India

Private Sector Funding Advantages Easing Budgetary Constraints  Improved Value For Money  Sharing of Risks Between Public & Private Partners  Reduction in Cost of the Project Main sources of Private Sector Funding Debt Equity Property Development Advertisements 18-09-2018 MoUD, India

Key Benefits of PPP: Entrepreneurship Rigorous project preparation Delivery of whole life solution Focus shifts to service delivery Time bound implementation plan Better overall management of public services PPP Options 18-09-2018 MoUD, India

Owner/ Concession Period (Yrs) PPP Examples – Metro Projects Project Owner/ Concession Period (Yrs) Concessionaire Total Cost (Rs./Crore) VGF (Rs./Crore) Current Success Delhi Metro Airport Link DMRC (30) Reliance Infrastructure Limited 5800 1786 NO Mumbai Metro Line-1 MMRDA (35) Reliance Energy Limited 2356 650 Mumbai Metro Line-2 8250 1532 Gurgaon Metro Rail Link HUDA (99) DLF & ILFS Limited 1088 - YES Hyderabad Metro HMRL L&T Metro Rail 11814 1458  YES  18-09-2018 MoUD, India

Examples – Bus Operations Indore City Bus Service Bhopal City Bus Service Rajkot City Bus Service Surat City Bus Service Bhubaneswar – Puri City Bus Service Ahmedabad BRT operations Delhi Bus Service 18-09-2018 MoUD, India

Case Study: Bus Operations – Indore (Atal Indore City Transport Services Limited) Before City Bus- Unorganised Transport 18-09-2018 MoUD, India

About AICTSL Inception in 2006 with a seed capital of Rs. 5 million. Adopted the net-cost based PPP model of bus operations… widely copied in other cities across India. Started with 37 buses with 4 operators. Installed vehicle tracking systems on the entire fleet, that is the best in the country even till date. Initiated the BRT project in Indore which is in the final stage of implementation. Funding from JnNURM allowed modernising the fleet with CNG buses that have electronic displays and voice announcement systems. 18-09-2018 MoUD, India

PPP Model of Bus Operations Public partners role: Planning of routes Inviting tenders for bus operations Providing support infrastructure Objective: Providing affordable & quality public transport Safety & Quality has helped attract trips from private travel modes Private operator responsibilities: Owns, operates & maintains fleet Collects fare from passengers Pays premium to AICTSL for right to operate on route 18-09-2018 MoUD, India

Lives Saved, Emissions Reduced Lives saved due to Indore City Bus :: 6 /year (0.024 fatalities/mill PKT * 0.64 mill PKT per day * 365 days) Hundreds of accidents avoided. CO2 Reduced ~5.5 ton/day 18-09-2018 MoUD, India

Challenges CNG fuel prices have increased by 64% in 24 months, thus reducing profitability to operators AICTSL has limited financial resources (premium from operators, advertising) for additional infrastructure Passenger ridership per bus has increased only marginally, not keeping pace with input costs Modernising the system by way of better workshop infrastructure, improved information for passengers and customer service is necessary for expanding the system. 18-09-2018 MoUD, India

Multilateral Development Banks (MDBs) Multilateral development banks (MDBs) provide finance for investments in human and physical capital that promote development. MDBs assist in Urban Transport Funding through the following: Loans Grants The Global Environment Facility (GEF) Clean Development Mechanism (CDM) 18-09-2018 MoUD, India

Innovative Financing Mechanism Has become increasingly relevant as cost of providing transport services has expanded more rapidly than revenue resources. The National Urban Transport Policy 2006 emphasises on innovative use of land as a resource for financing public transport projects. Urban Transport Fund Financing Through Cross-Subsidy Projects Property Development Land Value Capture Kiosks and Shops at Stations Taxes and Fiscal Incentives 18-09-2018 MoUD, India

Urban Transport Fund – Pimpri Chinchwad 100 metres on both sides of the corridor have been earmarked as the “BRT Influence Zone’ PCMC has raised the FSI in the influence zone from 1 to 1.8 with the added FSI of 0.8 being achieved through loading of TDR. Based on the total influence zone area along the 60 km BRTS corridor, additional 0.8 FSI permissible in the influence zone, the project can generate close to 5000 Crs of revenue  TDR Potential TDRs (mn sqft) Revenue from TDR use (Rs.cr) Max potential, assuming absorption in 80% of influence zone 83 4980 18-09-2018 MoUD, India

Case Study-The TTMC Concept BMTC developed the innovative concept of ‘Traffic and Transit Management Centres (TTMCs)’ The TTMC concept combines the development of passenger terminals with the creation of commercial real estate space. Revenue from rent of the commercial real estate space would cross subsidise the construction cost of the passenger terminal and amenities, and also form a source of continuing additional revenue for the corporation. Implementation 10 TTMCs have been constructed since 2009 Initial funding was provided by JNNURM 18-09-2018 MoUD, India

Thank You! 18-09-2018 MoUD, India