Though the ministry recommended DMRC explore alternative sources of funds such as bonds and market borrowings, the suggestion was unlikely to find favour with DMRC, “as it would financially strain the limited resources”, said DMRC sources. To resolve the issue, the ministry is also in talks with DMRC and a consortium of 10 banks, led by Axis Bank. It has asked DMRC to ensure the express line is financially viable “through an increase in ridership, exploring all property development potential”.
A senior ministry official said, “We are currently in talks with lenders and are exploring other options to raise money.”
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In a letter to DMRC, the ministry had said “grant or equity from the government should be the last option”. It had suggested options such as raising loans from the market and bonds, as was the case with the Bangalore Metro Rail Corporation. However, DMRC said if it had to borrow money from other sources, it made little sense to continue to operate a loss-making entity.
The Delhi Airport Metro Express Line has been recording a loss of about Rs 5 crore every month. “A loan or market borrowing would further strain us financially and add an additional burden of about Rs 16 crore. We can’t afford that,” said a senior DMRC official.
However, the ministry said DMRC should “legally examine the matter”---whether market borrowings would be feasible. Arbitration between Delhi Airport Metro Express Pvt Ltd and DMRC for the debt concerned is yet to start.
The ministry is trying to convince the lenders to substitute the operator---the only route through which the government can relieve the debt burden. According to sources, the lenders have told DMRC they are keen to just recover the money, not substitute the operator.
Earlier, Business Standard had reported DMRC would end up paying Rs 1,600 crore to the lenders, even in the event of a breach by the concessionaire, a clause put in the contract to give greater protection to the lenders. The Airport Express Line’s debt stands at Rs 2,000 crore, 80% of which would be paid by DMRC.
DMRC had taken over the Airport Express Line from private operator Delhi Airport Metro Express Private Ltd after the Reliance Infrastructure-led concessionaire said it would stop the service, citing a “material breach” in the concession agreement.
Reliance Infrastructure had said DMRC was liable to pay 100% of company’s debt and 130% of its equity.