BMRCL to fund ORR project through innovative financing schemes

Hopes to raise Rs 1,100 crore to reduce borrowings

Bangalore Metro Rail Corporation Ltd (BMRCL) is hoping to raise Rs 1,100 crore through innovative financing techniques to partly fund Metro project on Outer Ring Road (ORR) in the next three years.

The project covers 13 stations between Central Silk Board and KR Puram and is estimated to cost Rs 4,202 crore.

“The state, Centre and BMRCL’s contribution is pegged at Rs 1,000 crore and the Rs 3,200 crore deficit will be mobilised through borrowings. BMRCL would mobilise a sum of Rs 500 crore by long-term lease of its lands with commercial potential," a detailed project report (DPR), prepared by BMRCL's in-house team noted.

Since innovative financing techniques are being employed for the first time, BMRCL has used three different scenarios - pessimistic, optimistic and most likely - for the purpose of financial analysis. The primary contribution would be Rs 1,000 crore.

While BMRCL presumed there would be no mobilisation through innovative financing in the pessimistic scenario, it is expected to mobilise a sum of Rs 2,100 crore in the optimistic scenario. In the most likely scenario, it is estimated that the fund mobilisation would be Rs 1,100 crore, thus restricting the borrowings to about Rs 2,100 crore.

“However, the above situation may change in case the contribution from innovative financing is not on the expected lines. Then the gap will have to be filled by increasing the borrowings,” the report added.

It is also presumed that the expenditure during the three years of construction would be Rs 600 crore, Rs 1,800 crore and Rs 1,803 crore during 2017, 2018 and 2019 respectively.

Due to lower cost of construction compared to other corridors and with no significant land acquisition cost for the viaduct, the report underlines that the project is financially viable even in a pessimistic scenario.

Also, the ridership is expected to be more than other lines, because of high concentration of IT companies along the corridor and rapid transport facility being the need of the hour.