Mumbai: Icra said that the centre’s new metro rail policy giving emphasis to PPP model is likely to face challenges in attracting private investment given the low ridership witnessed in some of the operational metro projects and issues related with financial viability.
According to it, PPP in the metro rail sector has so far been limited to only six such projects, one of which was terminated before the start while another was terminated after it became operational.
The policy as per Icra, empowers states, by putting the onus on them to improve project viability, by promoting transit-oriented development and allying it with real estate development, and attracting private investments through the model.
“PPP in metro rail projects has been limited thus far due to three key factors — low financial viability, inadequate risk allocation, and lengthy dispute resolution. While transit oriented development or commercial development rights can enhance project viability to an extent, this may not be sufficient,” said Shubham Jain, VP and sector head, corporate ratings at ICRA.