Case Study: Airport Express Metro line: Project Financing model

By

Group Members

Roll No.

ABU ASIF HASAN

MP13001

AJIT KUMAR SINHA

MP13003

AKASH PRIYRANJAN

MP13004

ASHUTOSH K TRIPATHY

MP13017

GYANESH DUBEY

MP13026

SUMANTRA KUMAR KHAN

MP13060

XLRI
JAMSHEDPUR

Airport Express Metro line : Project Financing model

New Delhi MRTS was implemented in two phases . Phase I consisting of 65 Km track was commissioned in 2006 . A new company Delhi Metro Rail
Corporation was established in 1995 to execute the project . The company was a 50:50 JV between Government of India and the Government of Delhi NCR .
Financing of Phase I was 38.78% GOI and Airport operator as equity ; 1.22% by Government as land cost ; 60 % as Debt .
In Phase 2 the original scope of work was to install additional 121 Km of track to extend the coverage of the MRTS . The Airport Express Metro line
[AEML] was included in Phase 2 after Delhi was selected as host of XIX Commonwealth Games . AEML linked Indira Gandhi International Airport to the
New Delhi Railway Station through five stations over a route length of 19.2 Km consisting of 5.5 Km underground and 11.6 Km elevated track. The total
project cost inclusive of escalation and taxes was 38110 million . The available time for the project was only three years . So financial closure had to be
arranged quickly.
Problem: Selecting the financing model
The Capex year to year break up for AMEL is given below:

Alternatives : Phase 1 Model :

D:E = 7/3

PPP 1 Model

: D:E = 3/2

+ Viability gap funding

PPP2 Model :

Execution of Civil works by Public enterprise System cost borne by Concessionaire [D:E = 7/3]

Conclusion:

The project is not a commercially viable project at 100 / ticket.

So assistance from government is essential.
The three modes of financing are ranked in the table below based on

Ran
k

Financing model

NPV and minimum Government support [calculated /ticket] .

NPV 10

Fare at NPV =0
/ticket

Minimum subsidy
/ticket

Phase 1 Model

-23227

227.75

127.75

PPP : Civil works

by Gov.

-23244

237.26

137.26

PPP: Viability
funding by Gov

-23292

231

131

Viability funding
over 20 years
NPV 106

Subsidy for 12% ROE

to investor
/ticket

68937.72

264.74

It is clear from the above table that PPP method is not feasible if fare is kept at 100 / ticket because it is not desirable that
be supported with government aid . So the AEML should be financed in the same manner as Phase 1.

private operators