August 01, 2005

Hyderabad, India Betting the Bank on Elevated Rail

In the spring, however, after a round of staff changes, Hyderabad’s urban development authorities made an interim recommendation to pursue a three-corridor, elevated rail system, based on a proposal from the Delhi Metro Rail Corporation (DMRC). While not yet finalized, the system is to be financed through a build-operate-transfer scheme.

The ITDP pre-feasibility study found that for the same $1.1 billion capital investment required for the 37-kilometer elevated metro, a 294-kilometer BRT system could be built. The ITDP assessment also found that a BRT system in the same corridors would be self-financing including the cost of the buses, whereas the DMRC proposal would require a $35 million annual subsidy and require a 50% increase over current bus fares. In ITDP’s opinion, actual demand will at most be 70% of the DMRC’s projected demand.

Political support for the BRT concept waned when decision-makers faced some difficult decisions regarding the right of way. Roads through downtown Hyderabad vary greatly in width, and some stretches are quite narrow. While the ITDP proposal minimized land acquisition, calling for less expropriation than the DMRC proposal, and would have improved rather than adversely impacted mixed traffic, ultimately Hyderabad decision makers were unconvinced. They did not believe that a high speed, high capacity BRT facility could be built through downtown Hyderabad without hurting motorists or extensive expropriation.

Rail systems have also been aggressively marketed in most major Indian cities by the Delhi Metro Rail Corporation and other private consortiums. Experiences from other cities indicate that these companies tend to underestimate costs and exaggerate revenues, leaving taxpayers to pick up the tab. ITDP recommends that for any new system the Ministry of Finance require an independent assessment of the level of financial risk to which the taxpayers of Hyderabad and Andhra Pradesh are being exposed. 


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