Nagpur Metro: CAG flags delay, inadequate surplus
   Date :25-Dec-2022

Nagpur Metro 
 
 
Staff Reporter
The Comptroller and Auditor General (CAG), in its report on ‘Implementation of Nagpur Metro Rail Project by Maharashtra Metro Rail Corporation Limited,’ has flagged various issues including delay in execution of the project, violations, generated surplus proving to be ‘only a fraction of the amount required for servicing of debt.’
The CAG report was tabled in the Parliament on December 22, 2022. The audit covered the period from 2015-16 to 2020-21, and examined planning, implementation, monitoring, operations and maintenance, and outcome of the activities of Nagpur Metro Rail project. At the same time, the CAG acknowledged the adverse impact on execution of the project due to COVID-19 pandemic situation as well as non-receipt of funds from different stakeholder agencies.
As per the CAG report, the loss before tax reported by Maharashtra Metro Rail Corporation Limited (MMRCL) for Nagpur Metro Rail project has increased steadily since 2016-17 to 2020-21, except in 2018-19.
As per the report, in 2016-17 the project reported ‘loss before tax’ of Rs 2.90 crore. It rose to Rs 13.12 crore in 2017-18. In 2018-19, however, the loss reduced to Rs 7.11 crore. But, the loss again rose in 2019-20, to Rs 67.10 crore. The next year, the loss increased further to Rs 178.58 crore. MMRCL reported generation of Rs 13.14 crore surplus from 2015-16 to 2020-21, but the instalment due to be paid to the external agencies during 2021-22 stood at Rs 377.79 crore. Thus, CAG has observed in the report, the surplus generated was ‘only a fraction of the amount required for servicing of debt’. The loan amount is Rs 4,521 crore, which was raised by the Central Government for the project from external funding agencies. MMRCL stated that the ridership would increase once all the Reaches of the project were made operational. CAG acknowledged this but commented that though ridership might improve, “whether the revenues would cover the debt servicing needs close monitoring and appropriate interventions.”
In fact, CAG report points out that the actual ridership achieved in the project was ‘only 3.85 to 7.43 per cent of the ridership projected’ in the Detailed Project Report (DPR). Similarly, the revenue generation from non-fare box sources for 2018-19 to 2020-21 was only Rs 67.86 crore as against DPR projection of Rs 1,666 crore, and revenue realised on account of additional floor space index was Rs 67.59 crore as against projected amount of Rs 1,201 crore.
The audit report has also flagged that MMRCL did not lay down revised target despite being aware at the time of award of key civil works that the envisaged commercial operation would not materialise in April 2018. As a result, the construction work ‘lingered on’. The audit found ‘lack of periorisation of works’, ‘improper framing of work estimate’, ‘lack of transparency in tender evaluation’, payment of ‘interest-free mobilisation advance to contractors, the recovery of which was made from the running bills of the contractors, as per progress of work... was not in accordance with the guidelines of Central Vigilance Commission’, ‘inadequate planning in tendering of major works’, construction of two-level basements for parking facility at Kasturchand Park as ‘not a financially prudent decision’.