Special purpose vehicle for Metro rail

THIRUVANANTHAPURAM: The Special Purpose Vehicle (SPV) for implementing the Metro rail project in Kochi will be operational in two months with an authorised capital of Rs 2,000 crores.As the metro rail project is envisaged on the lines of the Chennai Metro Rail project model, a discussion will be held between the state authorities and the Chennai metro project officials at Chennai on Friday. “This will be the first among a series of discussions to be held with the Chennai Metro Rail officials since we are following the Chennai model here”, Tom Jose, managing director of the Kochi Metro Limited, told Express.The SPV Kochi Metro Limited will be floated taking into account the 15 percent equity to be shared each by the Centre and the state of the total estimated cost and the additional cost escalation that would be incurred over the coming five years of project implementation.“We are expecting the SPV to be in place in another two months’. There are certain conditions to be fulfilled before getting the company registered which includes having a percentage of authorised capital in the account of the company,” Tom Jose said.The expenditure under the new proposal, which banks on the Chennai Metro Rail project model, has been estimated at `4,427 crore, a steep rise from the estimated cost in 2005 when it was `1,966 crore. “Given that the idea is to contribute 15 percent of the total cost by the state and a matching share by the Centre, the amount would be around `1,500 crore”, he said. Adding the cost revision in the next five years which is roughly calculated using the Wholesale Price Index (WPI), the authorised cost has been worked out to be `2,000 crore. Within the state government, a proposal has been submitted to the Finance Department to sanction the state’s share of the equity.The cost of the land for the project would cover five per cent of the total cost, subordinate debt which is usually the amount met by the government as an interest-free loan to the company would cover 11 percent and exemption of taxes for the materials for construction would cover another three percent, which would put the share of the Centre and  state government’s in the project at 49 percent.The proposal prepared by the state says that 51 percent of the project cost would be met through loan.

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