FINANCING URBAN
TRANSPORT
INFRASTRUCTURE
Presentation Structure
 Urban Scenario
Investment Needs
Financing Structure
Financing Options
Urban Scenario
Rapid Rate of Urbanization
Urban population in India increased
from 62 million in 1951 to 377 million in
2011.
In 2011, 3 cities with a population
greater than 10 million and 53 cities
with a population greater than 1 million.
By 2031, it is projected that there will
be 6 cities with a population greater
than 10 million.
Rapid Motorization
 From 2001 to 2011, the annual
growth of population 1.6%, but
motor vehicles increased by almost
10%
 Average vehicle speed during peak
hour in many Indian cities is as low
as 10 kmph
. IIHS 2011. “Urban India 2011: Evidence”
Source: Road Transport Year Book (2009-2010 &2010 2011).
Ministry Of Road Transport & Highways Government Of India New Delhi
“Urban transport is the single most important
component instrumental in shaping urban
development and urban living.”
National Commission on Urbanization (NCU)
Investment Needs
Investment Needs – Next 20 years
Study
Total
Investment
for Services
Investments in
Transport
Infratsructure
Investment in
Mass Transit
Investment in
Road
Mckinsey Global
Institute (2007)
Rs 53 lakh
crs.
Rs 27 lakhs Crs
(51%)
Rs 18 lakh crs.
Rs 9 lakh crs.
High Powered Expert
Committee (HPEC)
Rs 39 lakh
crs.
Rs 22 lakhs Crs
(56%)
Rs 5 lakh crs.
Rs 17 lakh
crs.
The total expenditure on roads and urban transport
together out of the total expenditure is about same order
(as a percentage) as the Mckinsey estimate.
However, there is a major difference in the estimate for
roads vis-a-vis urban transport.
Key Issues Affecting Investment In
Urban Transport
 High Capital and Operation cost
 Long Gestation Period
 Project Viability
 User Charge
 Fare Revision
 Cost Recovery
 Demand Risk
 Social Linkages
 Macro economic policies
Financing Structure
Financing Structure
National Level – 12th
Five Year Plan
State level – State
Budgets
City Level - Municipal
Budgets
12th Five Year Plan - Goals
 To create an effective institutional framework to manage
investments
 Capacity building of State & City Officials
 Create walking & Cycling facilities
 Augment public Transport
 Improve accessibility and mobility
 Provide grade separated entries and by passes for
through traffic
 Improve road safety
 Use of technology for multimodal integration, safety etc
 Promote research in guided transport
12th Five Year Plan - Investments
 A total of Rs 3,88,308 cr is estimated to achieve the
goals of the 12th 5 year plan
Sources for the total investment
Source
Central Government
State Government/ Development Authorities
Property Development
Private Sector
Rs (in Crores)
85,843
1,07,585
5,268
1,35,560
Debt from Multilateral/ Bilateral institutions
31,606
Debt from domestic financial institutions
22,447
State Budgets
 In 11th Plan – of the total
investment state share was
32.6%
 12th Central Finance
Commission recommended to
augment Consolidated Fund
of the State to supplement
resources of panchayats and
municipalities
Sources of Investment
Financing Options
Financing options
Public Financing
Schemes
Private Sector
Investments
Financing
Sources
Multilateral
Investments
Innovative Financing
Mechanisms
Central Schemes
Jawaharlal
Nehru
National
Urban
Renewal
Mission
(JnNURM)
Urban infrastructure Development Scheme for Small &
Medium Towns (UIDSSMT)
Viability Gap Funding (VGF)
Central Assistance for doing Technical Studies like CMP,
Metro DPRs etc.
Private Sector Funding
Advantages
 Easing Budgetary Constraints
 Improved Value For Money
 Sharing Of Risks Between Public & Private Partners
 Reduction In Cost Of The Project
Main sources of Private Sector Funding
Debt
Equity
PPP
Key Benefits of PPP
 Rigorous project preparation
Delivery of whole life solution
Focus shifts to service delivery
Time bound implementation plan
Better overall management of public services
PPP Options
Examples – Metro Projects
Metro Link
Concessioni
ng
Authority
Concessionaire
Delhi Metro
Airport Link
DMRC
Reliance
Infrastructure Limited
Mumbai Metro
Line-1
MMRDA
Mumbai Metro
Line-2
Total Cost
(Rs./Crore)
VGF
(Rs./Crore)
Concession
Period
5800
1786
30 Years
Reliance Energy
Limited
2356
650
35 Years
MMRDA
Reliance Energy
Limited
8250
1532
35 Years
Gurgaon Metro
Rail Link
HUDA
DLF & ILFS Limited
1088
-
99 Years
Hyderabad Metro
HMRL
L&T Metro Rail
11814
1458
35 Years
Examples – Bus Operations
Indore City Bus Service
Bhopal City Bus Service
Rajkot City Bus Service
Surat City Bus Service
Bhubaneswar – Puri City Bus Service
Ahmedabad BRT operations
Delhi Bus Service
Case Study: Bus Operations – Indore
(Atal Indore City Transport Services Limited)
Before City Bus- Unorganised Transport
About AICTSL

Inception in 2006 with a seed capital of Rs. 5 million.

Adopted the net-cost based PPP model of bus
operations… widely copied in other cities across India.

Started with 37 buses with 4 operators.

Installed vehicle tracking systems on the entire fleet,
that is the best in the country even till date.

Initiated the BRT project in Indore which is in the final
stage of implementation.

Funding from JnNURM allowed modernising the fleet
with CNG buses that have electronic displays and
voice announcement systems.
 PPP Model of Bus Operations
 Public partners role:
Safety & Quality has helped
attract trips from private travel
modes

•
Planning of routes
•
Inviting tenders for bus operations
•
Providing support infrastructure
Objective: Providing affordable
& quality public transport
 Private operator
responsibilities:
• Owns, operates & maintains
fleet
• Collects fare from passengers
• Pays premium to AICTSL for
right to operate on route
Lives Saved, Emissions Reduced
Mode of Transport
Private Vehicles
PT – City Bus
PT – IPT
Bicycle + Walk
Others
TOTAL

Passenger Km
Travelled
Modal Split
(PKT)
9.40 million
0.64 million
1.31 million
2.91 million
0.72 million
14.98 mill.
62.8 %
4.29 %
8.77 %
19.4 %
4.74 %
100 %
Lives saved due to Indore City Bus ::
[3]
Fatalities
Caused (2010)
80
0
12
0
128
220
Fatalities Per Travel
Kms
0.0233 /mill. Km.
0.0 /mill. Km.
0.0251 /mill. Km.
0.0 /mill. Km.
0.4871 /mill. Km.
0.0402 /mill. Km.
6 /year
 (0.024 fatalities/mill PKT * 0.64 mill PKT per day * 365 days)
 Hundreds of accidents avoided.
 CO2 Reduced
~5.5 ton/day
Challenges
 CNG fuel prices have increased by 64% in 24 months,
thus reducing profitability to operators
 AICTSL has limited financial resources (premium from
operators, advertising) for additional infrastructure
 Passenger ridership per bus has increased only
marginally, not keeping pace with input costs
Modernising the system by way of better workshop
infrastructure, improved information for passengers
and customer service is necessary for expanding the
system.
Multilateral Development Banks (MDBs)
 Multilateral development banks (MDBs) provide finance
for investments in human and physical capital that
promote development.
 MDBs assist in Urban Transport Funding through the
following:
 Loans
 Grants
 The Global Environment Facility
(GEF)
 Clean Development Mechanism
(CDM)
Innovative Financing Mechanism
 The issue of urban transport financing has become increasingly
prevalent in recent years as costs of providing transport services
have expanded more rapidly than traditional revenue resources.
 The National Urban Transport Policy of April 2006 also lays emphasis
on the innovative use of land as a resource for financing public
transport projects.







Urban Transport Fund
Financing Through Cross-Subsidy Projects
Property Development
Land Value Capture
Kiosks and Shops at Stations
Taxes and Fiscal Incentives
Cross Subsidy
Examples- Innovative Financing Scheme
Non Fare Box Revenue
Sl. No. Project Name
Farebox
Revenue (%)
Non Fare Box
Revenue (%)
1
Singapore Metro
89
11
2
Bangkok Metro
88
12
3
London Metro
83
17
4
Washington Metro
77
23
5
New York Metro
70
30
6
Hong Kong Metro
37
63
Case Study- BRTS Project – PCMC
 PCMC has planned for 10 BRT routes for quick and
effective transit and the cost for the first phase is about Rs.
1540 crore
 PCMC has set up an Urban Transport Fund (UTF),
managed by an SPV, PCMC Infrastructure Company Ltd
(PICL), to finance its share of the BRT project.
Urban Transport Fund – Pimpri
Chinchwad
100 metres on both sides of the corridor have been
earmarked as the “BRT Influence Zone’
PCMC has raised the FSI in the influence zone from 1
to 1.8 with the added FSI of 0.8 being achieved
through loading of TDR.
Based on the total influence zone area along the 60
km BRTS corridor, additional 0.8 FSI permissible in
the influence zone, the project can generate close to
5000 Crs of revenue
TDR Potential
TDRs (mn
sqft)
Revenue from TDR
use (Rs.cr)
Max potential, assuming absorption in
80% of influence zone
83
4980
Case Study-The TTMC
Concept
 BMTC developed the innovative concept of
‘Traffic and Transit Management Centres
(TTMCs)’
 The
TTMC
concept
combines
the
development of passenger terminals with the
creation of commercial real estate space.
 Revenue from rent of the commercial real
estate space would cross subsidise the
construction cost of the passenger terminal
and amenities, and also form a source of
continuing additional revenue for the
corporation.
Implementation
 10 TTMCs have been constructed since
2009
 Initial funding was provided by JNNURM
Thank You!