Finally, the State Govt. Published the full version of K-Rail DPR On the website of the Legislative Assembly. It has VI volumes. Financial feasibility, the major aspect of the project is dealt with in Section II. The loose ends and discrepancies in the financial feasibility study show how badly the DPR has been prepared.
Let us consider the key points. First, the optimum fare for silver Line 2.75 per km (page 19-181 Volume II and page 19 Executive Summary). In that case, total revenue in 2025-26 should be Rs 1,605 crore (79,934 x 200 x 2.75 x 365 days), while total revenue is assumed to be Rs 2,276 crore (79,934×200 x 3.90 x 365 days). The average fare is Rs 3.90/km, which is more than the maximum slab of Rs 3/km. This requires clarification.
Thereafter, the fare box revenue is shown as Rs 2,276 crore in 2026 which is 3.90/km on rent basis and the fare is expected to grow by 6% every year (Page 74 Executive Summary Vol I & Page 19-181 Vol II of ) while the cost is increased at the rate of 5% p.a. (item no. iv in pages 15-22 in Volume II). If inflation is the criterion for estimating 5% cost growth per year, the same criterion should apply to revenue.
The rationale for assuming the average passenger travel length @ 200km (pages 19-181) for 50 years has not been clarified. The creation of surplus for repayment of debt indirectly is also based on this assumption. Similarly, the revenue from RoRo (Roll on Roll Off) is calculated at an annual growth of 6%, while the annual growth in revenue from advertising, station naming rights, fares from kiosks and ATMs etc. is calculated at 5%. Is performed. Increase in cost in respect of all items viz. Civil, Electrical, Signaling and Train Control and Communication, Ticketing and Fare Collection and Rolling Stock etc. have been increased at the rate of 5% at the level of March 2020 (pages 15-27 Vol II). But what is the logic?
Pages 13-391 (Volume II) indicates that RoRo can have 445 trucks per day. Page 75 (Executive Summary Volume I) says the rate per km is @ Rs 25 and the average RORO journey is @ 392 km. If so, the total revenue in a year should be Rs 159 crore (365 days x 392 km x 25×445 trucks) in the best scenario. However, the revenue flow from RoRo is pegged at Rs 237 crore in 2025-26 (pages 19-184). It should be explained.
The Finance Model page 77 (Executive Summary, Volume I and Pages 17-116, Volume II) shows the debt component @ 60% while in pages 19-203 Section II, it is counted at 52.7%. This shows how seriously the DPR was prepared.
Loans from International Agencies (JICA) will have a ‘string’ attached to it (for procuring key components and machinery from Japanese companies to the beneficiary). K-Rail will not have the liberty to investigate competing offers. A thorough investigation is needed for agreements with such international agencies, requiring a lot of reading between the lines. Generally, international agencies would require a sovereign guarantee for such soft loans. If the Government of India is not offering the Sovereign Guarantee, the funding agencies may not welcome the loan proposal. State government guarantees are not considered sovereign guarantees.
As per DPR (pages 15-121), the estimated project cost as per March 2020 price level, excluding IDC (interest during construction @ Rs 164 crore), is @ 63,776 crore. If the cost is increased @ 5% per annum, the project cost in 2026 will be more than Rs.85000 crores. Another delay @ 6 years can drive up the cost to over Rs 1 trillion.
a purushottmanFormer General Manager, SBI, Global Markets
Let us consider the key points. First, the optimum fare for silver Line 2.75 per km (page 19-181 Volume II and page 19 Executive Summary). In that case, total revenue in 2025-26 should be Rs 1,605 crore (79,934 x 200 x 2.75 x 365 days), while total revenue is assumed to be Rs 2,276 crore (79,934×200 x 3.90 x 365 days). The average fare is Rs 3.90/km, which is more than the maximum slab of Rs 3/km. This requires clarification.
Thereafter, the fare box revenue is shown as Rs 2,276 crore in 2026 which is 3.90/km on rent basis and the fare is expected to grow by 6% every year (Page 74 Executive Summary Vol I & Page 19-181 Vol II of ) while the cost is increased at the rate of 5% p.a. (item no. iv in pages 15-22 in Volume II). If inflation is the criterion for estimating 5% cost growth per year, the same criterion should apply to revenue.
The rationale for assuming the average passenger travel length @ 200km (pages 19-181) for 50 years has not been clarified. The creation of surplus for repayment of debt indirectly is also based on this assumption. Similarly, the revenue from RoRo (Roll on Roll Off) is calculated at an annual growth of 6%, while the annual growth in revenue from advertising, station naming rights, fares from kiosks and ATMs etc. is calculated at 5%. Is performed. Increase in cost in respect of all items viz. Civil, Electrical, Signaling and Train Control and Communication, Ticketing and Fare Collection and Rolling Stock etc. have been increased at the rate of 5% at the level of March 2020 (pages 15-27 Vol II). But what is the logic?
Pages 13-391 (Volume II) indicates that RoRo can have 445 trucks per day. Page 75 (Executive Summary Volume I) says the rate per km is @ Rs 25 and the average RORO journey is @ 392 km. If so, the total revenue in a year should be Rs 159 crore (365 days x 392 km x 25×445 trucks) in the best scenario. However, the revenue flow from RoRo is pegged at Rs 237 crore in 2025-26 (pages 19-184). It should be explained.
The Finance Model page 77 (Executive Summary, Volume I and Pages 17-116, Volume II) shows the debt component @ 60% while in pages 19-203 Section II, it is counted at 52.7%. This shows how seriously the DPR was prepared.
Loans from International Agencies (JICA) will have a ‘string’ attached to it (for procuring key components and machinery from Japanese companies to the beneficiary). K-Rail will not have the liberty to investigate competing offers. A thorough investigation is needed for agreements with such international agencies, requiring a lot of reading between the lines. Generally, international agencies would require a sovereign guarantee for such soft loans. If the Government of India is not offering the Sovereign Guarantee, the funding agencies may not welcome the loan proposal. State government guarantees are not considered sovereign guarantees.
As per DPR (pages 15-121), the estimated project cost as per March 2020 price level, excluding IDC (interest during construction @ Rs 164 crore), is @ 63,776 crore. If the cost is increased @ 5% per annum, the project cost in 2026 will be more than Rs.85000 crores. Another delay @ 6 years can drive up the cost to over Rs 1 trillion.
a purushottmanFormer General Manager, SBI, Global Markets