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Delhi govt claims it brought down Metro Phase 4 cost by Rs 10,000 crore

Delhi transport minister Kailash Gahlot said one of the reasons why the cost of Phase-IV got reduced was a condition on cost escalation put by the Delhi government before the DMRC.

delhi Updated: Nov 06, 2018 11:23 IST
Sweta Goswami
Sweta Goswami
Hindustan Times, New Delhi
Delhi metro phase 4,Delhi government,Delhi Metro Rail Corporation
A view of a Delhi's metro train at South Extension Station, in New Delhi on August 6.(Sanchit Khanna/HT PHOTO)

The Delhi government on Monday said that the cost of Metro’s Phase-IV came down by Rs 10,000 crore as it had specifically asked Delhi Metro Rail Corporation (DMRC) to cut the project’s expenditure.

Transport minister Kailash Gahlot said one of the reasons why the cost of Phase-IV got reduced was a condition on cost escalation put by the Delhi government before the DMRC. For all projects, Delhi Metro keeps certain percentage of its total cost for the expenditure incurred on construction based on changes in the price index over a period of time, which is known as cost escalation.

“The Delhi government had clearly conveyed it to DMRC in January, 2017 that the Phase-IV project would get approval only if its annual escalation factor was reduced to 5% instead of 7.5% as was proposed in the first DPR (detailed project report),” he said.

A cabinet note dated January 6, 2017, seen by HT, corroborated the claims made by Gahlot.

DMRC declined to comment on the issue. It, however, acknowledged that one of the reasons for reduction in the project cost was the decrease in the cost escalation factor.

On Sunday, Hindustan Times had reported that DMRC recently revised the total project cost for all the six corridors of Phase-IV to Rs 45,603 crore. This was Rs 55,208 crore in the first DPR submitted to the Central and Delhi governments in 2016.

Claiming that the Delhi government saved thousands of crore of rupees on the project, Gahlot said the DMRC agreed to its condition after over a year, which delayed the project.

“Had the government not demanded the 5% figure, DMRC would have continued with the same cost escalation factor and Delhi’s taxpayers’ money would have been spent unnecessarily,” the minister said.

After a wait of more than two years, the Metro Phase-IV proposal will finally be tabled before the Delhi cabinet next week. This comes after a wait of two years when the government had first given an in-principle approval to the project in 2016.

Worried by the cost involved and the subsequent Metro fare hikes, the Delhi government then (in 2016) had asked the finance department to conduct a feasibility study on Phase-IV.

In its report, the finance department wrote that the project could turn out to be a “colossal waste of money” and declared three of the six corridors “financially unviable”. Following this, the Delhi government had refused to approve the project.

First Published: Nov 06, 2018 11:23 IST