IL&FS Rail gains speed with Gurgaon Metro; aggregators go unregulated: MD

With the commissioning of the second leg of Rapid Metro in Gurgaon on March 31, IL&FS Rail has firmly established itself as a Metro operator. The company now operates 11.7 kilometres built at a cost of about Rs 3,600 crore in the IT hub of Gurgaon, with 11 stations enroute.

Talking to Business Standard, Rajiv Banga, managing director and chief executive officer, IL&FS Rail, said the company did not have any immediate plan to move to other cities but would look for extensions of the existing network in Gurgaon. “Metro networks thrive on extension rather than starting in new geographies. We will first look at extension. However, we continue to look at opportunities.”

Speaking on the recent challenges that Metro systems face, Banga said these were early days for public private sector agreements. “When you do long-term concessions, everything cannot be envisaged. For example, when we started in 2009, did anybody dream about Ubers and Olas and what they would do to the world?”

He said contradictions emerged since on the one hand there was capital- and technology-intensive model and regulated fare fixation, and on the other there was asset-light model of aggregators with no regulatory framework. “The other forms of transports, called intermediate public transport, do not have a policy, leave aside regulation. That is competition for us. Somewhere there has to be larger appreciation that when you have PPP framework, the public entity has a role and need to work alongside to make it work. There are new modes of transportation like pods, how can anybody envisage about them from the day one,” he said.

Banga said “a certain appreciation and mechanism to deal with such eventualities” were needed if the PPP format had to work. “We are not talking about renegotiating contracts but there has to be sensible progress.” 

IL&FS started construction on the second leg of Rapid Metro in November 2013 with a target to finish by the end of 2016. There were lot of activities like external development which took time. Eventually, it took three years and four months. “Doing projects like these which are in public space in less than 3.5 years is pretty much on shortest timeline. Typically, it takes 4-4.5 years,” Banga said.

The challenges metro systems face include land acquisition or right of way, which means getting access to unencumbered land. In case of Rapid Metro, there was the issue of underground utilities like a Bharat Petroleum Corporation’s pipeline that ran along the metro road though land acquisition was not a very great challenge since the Haryana Urban Development Authority had to give land to the company. 

The Rapid Metro has a 750 volt DC system which is not through overhead lines but along the track like in Europe. In India, the only other metro that will have such a electrical connection is Kochi, said Banga. 

While the first section of the metro has been designed as a circular system, in the new one, there is up and down lines. Banga said the circular design was because of the geography. “It was a 5 km line and there was a catchment in the middle. The only way you service it is you envelope it. It was a single-track system.” This section connected people from Delhi to the IT hub of Cyber City while the new section gives accessibility to residents of Gurgaon working in Cyber City, Udyog Vihar and Golf Course Road.

Banga said a private operator does not have the remit and control over everything else. The urban local body, city administration and the state have a role to play to integrate it with the larger eco-system. “Metros are mass rapid transport systems but how do you evacuate, disperse and feed into the system needs to happen at the stations. As a private enterprise our remit does not extend to bus. We are looking at last mile connectivity with aggregators but it really depends on the local municipal body. For a facility like this to give a desired benefit to the entire citizenry you need to integrate it with the ecosystem. It cannot be a standalone system but has to meaningfully co-exist with everything else which is where multiple authorities are required to play a role.”

Rapid Metro’s non-fare revenue is higher than fare at 55 per cent. According to Banga, this was so because fare collection is currently not high. “Non-fare should be lower than 50 per cent. We cover our operating expenses. It is the financing cost which is still uncovered.”