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Land acquisition issues hinder Kochi Metro expansion
The Hindu Business Line  |  October 13, 2017

Ksenia Kondratieva Mumbai

Even as Kochi Metro is awaiting approvals for the second phase of the project, it is finding the new Land Acquisition Act cumbersome.

 

Last week, Kochi Metro Rail Ltd (KMRL) commissioned the second reach of 27-km Phase-I of Kochi Metro &ndash just three months after Prime Minister Narendra Modi inaugurated the first 13.26-km stretch of the Rs. 5,181-crore project co-financed by France’s AFD Bank.

 

Ridership

 

According to the data shared by KMRL, in a 10-day period (October 1 to 10) during which the second reach connecting the urban centre Aluva to the city centre was opened, the metro recorded 3.48 lakh ridership and revenue of Rs. 1.3 lakh.

 

Since the beginning of operations in June, KMRL registered total ridership of 32.3 lakh with average monthly ridership of around 31,100, and generated a revenue of Rs. 10.88 crore.

 

While KMRL management is expecting the ridership to improve significantly as the metro network grows, reaching a target of 3 lakh people a month will take another 5-6 years, KMRL Managing Director Elias George told BusinessLine .

 

Expansion plans

 

According to George, expanding the metro system and improving last-mile connectivity are necessary for KMRL to make the metro project financially viable. The Phase-II of the metro totalling 12 km is currently in the process of getting necessary approvals, he said. However, the new phase costing around Rs. 2,000 crore is facing challenges over the new Land Acquisition Act.

 

“Kerala doesn’t have specific legislation which can be a shortcut to land acquisition. This is the biggest problem for infrastructure projects in India. The new Act is so complicated, it is difficult to apply it on ground,” George said.

 

Another project that KMRL is getting ready to roll out is Kochi Water Metro — a system of more than 70 ferries connected with the rest of the metro system directly or by buses. The Rs. 1,000-crore project is partly financed by German KfW Bank.

 

Revenue challenge

 

According to the KMRL chief, there are very few metro projects in the world that are able to make profits from ridership. “The metro is a ‘new toy’ and you get a lot of advertising revenue,” he said.

 

KMRL is exploring options to generate additional revenue from advertising. One of them is station-naming activity &ndash the company has recently tendered naming rights for one of the stations at Rs. 6.5 crore a year. KMRL is planning to float new tenders for station-naming rights with 3-year duration in the next two months.

 

For co-branded ticketing system, the company has tied up with Axis Bank that created a contactless metro card combining a travel pass with a RuPay Platinum Card that can be used for any financial transactions. “For the right of co-branding, the bank has invested in the entire ticketing system. Axis Bank has paid a premium of around Rs. 200-300 crore for it,” George added. He added that another source of revenue for the metro would be real estate projects developed within the metro stations and the additional land provided by the government.

 

Changing travel patterns

 

According to George, Kochi was the second tier-2 city in India after Jaipur to get Rapid Metro project sanctioned and now India has eight metro projects in Tier-1 and -2 cities.

 

“Another 30 to 40 towns and cities are going to have metro projects in the near future, and this will bring a lot of disruption in the public transportation system,” he said. “Once the metro comes in, there are a lot of financial re-engineering required for the other modes of transport as many of them will become non-viable. Routes have to be changed as people’s mobility patterns changes. So there are a lot of changes in the urban scenario.”

 

The idea, according to George, is to make people leave their private transport and start using public transport that should be seen as one system with common timetable, common ticketing and common command and control centre. He, however, added that while such coverage is “doable” in places like Kochi, it may not be true for larger metros like Mumbai.