Financial Sustainability of Regional Transit - RRTS

National Capital Region Transport Corporation Limited (NCRTC)

9th November 2016

Outline

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What is RRTS?

Why RRTS?

How is it different from MRTS?

Financially Sustainable?

Where do we go from here?

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NCRTC

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What is RRTS?

• Regional Rapid Transit System-Regional,

Rail based, 100-150 km

• Dedicated, high speed, high capacity,

comfortable and safe commuter service

connecting regional nodes

• RRTS is different from conventional Railway

as it will provide high frequency, point to

point regional travel for passengers at a high

speed along dedicated railroad

• RRTS is different from metro as it caters to

passengers looking to travel relatively longer

distance with fewer stops and at higher

speed

For Commuters, RRTS offers

Why RRTS

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National Capital Region (NCR)

• Multi-state region with National Capital

as Centre

• Area of about 35,000 Sq Km

• With 46 million population, largest

metropolitan area in the world.

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Why RRTS

• Existing cities are congested – brown field investments slow in

execution & impact

• Hence, there is a need to create alternate/additional growth

centres away from megacities

• Such developments will result in exponential growth with large

socio-economic benefits

Rapid & Mass connectivity catering to unmet and induced

travel demand can lead to Sustainable Regional

Development

Why RRTS – Development of Megaregions

• Indian Economy is expected to reach $ 5 trillion by 2025-26

• Two Third of this Economy will be located in 3 Megaregions

• National Capital Region consisting of 19 districts

which may expand further

• Mumbai-Pune-Thane belt extending upto Ahmedabad

• Chennai to Bangalore

• Each one of these will have a $ 1 Trillion economy

• How will people commute in these Megaregions?

These Megaregions will need wider connectivity and

transport corporations that will have ownership of all

participating stakeholders and state governments

NCRTC – Institutional Structure

• NCRTC was incorporated in Aug’2013

• 4 State Governments joined hands with GoI to implement

country’s first Regional Transit System in NCR

• Equity structure of NCRTC is :

Govt of India - 50%

States of NCR -50% (12.5% each)

State Govt of UP

State Govt of Rajasthan

State Govt of Haryana

Government of NCTD

How is it different from MRTS ?

• Variations in geographic reach

(within city or regional) and

majority commuter profile

• Both can be feeder/dispersal

systems for each other

• MRTS and RRTS are not

supplementary but complementary

to each other

How is it different from MRTS ?

• Impact on city development

– MRTS typically results in densification within

city limits, however, incremental value

appreciation is limited

– However, RRTS can support creation of urban

agglomeration and satellite cities or new

economic centers around main city, like Delhi

– Resultant impact of RRTS in terms of

incremental value is much larger as it

improves regional connectivity

Appreciation of Land Value at the furthest Point

Financial Sustainability

World over mass transport systems are financially not

sustainable on stand alone basis and are supported through

Government support/subsidy

Financial viability definition needs to be revisited,

The project needs to recover O&M expenses, preferably

through fare box collections

Financially Sustainability improves as we move to right….

O&M Interest Systems Infra Land, other

costs Manpower, energy & spares

Rolling stocks, S&T, E&M

Civil Infra, Tracks, Stations, Depots

Non-Recurring Cost (Capex) Recurring Cost (Opex)

Enabling Financial Sustainability (1 of 4)

Standardization of Technical Specification • Multiple Urban Transportation Projects are coming up in the Country • Opportunity for economy of scale by fixing common standards for similar projects and

encourage common tendering – MoUD actively working Unified Transport Planning Authority • A planning authority which can facilitate the coherent working of multiple

transportation/government agencies • The agency’s mandate should be to decrease the cost and time of project execution

through better management of land acquisition/RoW issues and promote multi modal integration

• Employing Value Engineering to bring down the Project cost

Enabling Financial Sustainability (2 of 4)

Rationalizing Manpower Cost • Promoting Cross functioning and Multi Tasking

• Outsourcing of non-critical activities

Bringing down the Energy expenses • Optimised Operations

• Employing PPP to use non-conventional energy sources at lower

rates

Enabling Financial Sustainability (3 of 4)

Minimize Interest cost • Adherence to Project time lines to reduce IDC

• Selection of soft loans after due diligence

Reducing Spare Costs • Development of local vendors for supplying spares

• Use of IT to enable optimum utilization ( Assets Management System)

Enabling Financial Sustainability (4 of 4)

Fare Box

Non-Fare Box

PULL Quality of Service Integration with other

transport systems, last mile connectivity

PUSH

Discouraging Private Transport Uses

Regulation, Design

RIDERSHIP

TOD and Land Use Integration

Alternate Revenue Models

Conventional Sources

Additionally, Value Creation in Land and Regional economy needs to be captured by appropriate

authorities and ploughed back to the RRTS

Case Study –Regional Rail in Germany

In Germany, 27

regional passenger

rail authorities are

responsible for

organizing and

financing RRT in

their respective

regions

The regions receive

approximately 7 billion

Euro per year to support

operating deficit

Revenue from Fare box

States and regions support

investments made by DB Netz AG

(Infrastructure manager)

Access charges typically supports

up to 1/3rd of capex financing

Case Study –Regional Rail in France

The responsibility

of financing the

regional passenger

rail services in

France is assigned

to the 20

metropolitan

regions

The amount paid in

compensation for the regions

is approximately 2 billion

Euros to support Operations

Deficit

States and regions support

investments made in Rail

Infrastructure

Take away

Mass Transit projects, on standalone basis, not financially viable, as they may not match the benchmark criteria for FIRR by GoI

Need to evaluate “RRTS projects” on overall regional socio-economic impact basis and not pure financial feasibility

The deficit (in capex or opex or both), then, needs to be met through appropriate value capture mechanisms

State governments, being the largest beneficiaries, to take lead in capturing the value addition and passing on to projects – GoI guidelines

गति से प्रगति

Thank You

RRTS will travel at 3 times the average speed of Metro