Gurgaon Rapid Metro: A public project for private gain

Senior IAS officer Ashok Khemka’s scathing letter to the state government called attention to the irregularities in the Gurugram Rapid Metro project and how a select few real estate companies have profited from it. A look at the details

On November 27th, a tweet by Ashok Khemka, principal secretary of the Science and Technology Department, caught the attention of netizens and media, though one cannot call it entirely surprising. A senior IAS officer of the Haryana cadre, Khemka was already known to be Haryana’s second-most transferred bureaucrat (52 times in his 27 years of service) and shared news of his 53rd transfer through this tweet.

Khemka, born in Kolkata** and an alumnus of IIT Kharagpur, shot to limelight through a series of exposés, including the Robert Vadra DLF land grab scam, Sonepat-Kharkhoda IMT land scam case and Garhi Sampla Uddar Gagan land scam. And while there is nothing to connect or impugn motive to his latest transfer, it is nevertheless interesting to note what he has been trying to sensitise people about.

A serial whistleblower on corruption and money wasting by the government, Khemka’s latest target is Gurgaon’s Rapid Metro project and how a select few real estate companies have profited from it. Khemka’s blistering letter to the state government outlining the corrupt underbelly of this huge infrastructure project is just one among many such revelations he has made about irregularities by the earlier Congress and the present BJP-led state government.

Khemka, who came into the limelight for cancelling Congress leader Sonia Gandhi’s son-in-law Robert Vadra’s illegal land deal in Gurgaon, has been a strong critic of the 11.6- km Gurgaon’s Rapid Metro project right from the beginning. In a recent letter  to the Chief Minister Manohar Lal Khattar, Khemka said that ridership estimates had been hugely inflated and the project has left the Haryana government with liabilities to the tune of Rs 3,771 crore, having been awarded to a lone bidder — a concession agreement allegedly skewed in favour of private companies and resulting in undue accrual of benefits to real estate players in the process.

Inflated ridership numbers

Khemka however is soldiering on. Unwilling to speak further on the subject, fearing another transfer, he said that he stood by every word of his letter to the chief minister about the project. Khemka pointed out several irregularities that led to private operators threatening to stop operations; this resulted in the Delhi Metro Rail Corporation (DMRC) taking over the Rapid Metro on October 23rd. DMRC will now be responsible for the operation and maintenance of the line, officials said.

“We are committed towards providing the best possible services to the commuters of Rapid Metro line,” said an official spokesperson of DMRC, “The DMRC management has already deployed adequate staff to maintain station and train operations so that passenger services may be maintained in a smooth and trouble-free manner.” With the DMRC taking over operations of Gurgaon Rapid Metro, the total operational Metro network in Delhi and NCR has now gone up to 389 KM with 285 stations including those on the NOIDA-Greater NOIDA corridor.

About Gurgaon Rapid Metro, Khemkha’s letter says that in its original proposal, DLF estimated the average daily ridership for the 5.1-km stretch – from Sikanderpur Metro Station on the DMRC Yellow Line to its properties running through DLF Phase II, Phase III and Cybercity – at approximately 2 lakh in 2015 and 2.6 lakh in 2021. The numbers were bumped up in the detailed project report (DPR) prepared by Rapid MetroRail Gurgaon Ltd (RMGL) to 3,11,246 in 2015 and 3,72,560 in 2020.

The first phase started commercial operations in November 2013, but ridership levels never came anywhere near the projected figures, the main reason for the huge losses suffered on the project. Khemka added in his letter that the DLF and IL&FS projected such high ridership mainly to obtain free Right of Way and bank credit to create infrastructure at public expense for their private benefit.

The project was undertaken in two phases: The initial 5.1-km stretch was awarded in July 2009 to a sole bidder RMGL, a special purpose vehicle floated by IL&FS and DLF-promoted firms and executed at a cost of Rs 1,088 crore. The second 6.5-km stretch, proposed by RMGL, was allotted in October 2012 to a single bidder again — Rapid MetroRail Gurgaon South Ltd, another SPV promoted by IL&FS group firms, at a cost of Rs 2,143 crore.

Bankruptcy all around

The Concessionaire Companies are currently insolvent and bankrupt. Any order obtained from a Court directing an insolvent and bankrupt entity to operate the lines is farcical, Khemka points out, as the costs will have to be borne by the creditors. The involved parties — DLF, IL&FS, State of Haryana, Union of India and the banks – have not been impleaded in the writ petition. The unwillingness to pierce the corporate veil indicates an intent to play along with the companies at public cost.

The metro project is essentially a sweetheart deal between the state of Haryana and banks and DLF and IL&FS, alleges Khemka, as the SPVs are group companies of IL&FS and now classified as red entities in the pending bankruptcy proceedings before the NCLT, Mumbai Bench.

The debt obligations of IL&FS and its group companies reportedly amount to over Rs 100,000 crores which it is unable to meet. Of this, the contribution of the two SPVs towards the unmet debt obligations is Rs 3,770 crores. The equity of the two SPVs is essentially contributed out of the bank debts of IL&FS and its group companies. The Economic Offences Wing, Delhi has filed an FIR against IL&FS, IL&FS Transportation and others for siphoning funds to the tune of Rs 154.07 crores.

But the ED probe is only the tip of the iceberg, according to Khemka, who feels the actual siphoning by IL&FS and its group companies will be much more. Even though the whole of the outstanding capital of Rs 3,770 crores in the two SPVs will ultimately go down the drain, the loss will be entirely borne by the public and no individual promoter will  face any loss.

The bankruptcy of IL&FS put the Rapid Metro service at the risk of closure and the Haryana Urban Development Authority (HUDA) entered an agreement with DMRC for operating the services for the next five years.

The Punjab and Haryana High Court division bench of justices R K Jain and Arun Kumar Tyagi ordered that the metro corridor should be handed over under the supervision of Justice Kailash Gambhir and Justice V K Gupta, retired judges of the Delhi High Court. The bench made it clear that the handover process shall be initiated from September 23rd. The high court also asked the Comptroller and Auditor General of India (CAG) to ascertain the amount of actual debt due to Rapid Metro.

Haryana Mass Rapid Transport Corporation (HMRTC) and Haryana Shahari Vikas Pradhikaran (HSVP), the two agencies that had moved the High Court against a termination notice served by RMGL earlier this year, signed an agreement with DMRC on September 16th to run the corridor for five years. Rapid Metro had sought compensation of Rs 1,484 crore from the government to sustain its operations, citing breach of contract clauses. It served the termination notice this June, expressing its inability to run the metro corridor after September 8th.

Poor route plan

One reason for the Rapid Metro failing to take off in Gurugram was because it passed through a high income stretch of colonies, where residents do not use public transport anyway. The annual report of 2017-18 throws up a strange fact—-Rapid Metro earned about 60 per cent of its revenues from advertisements, while the share of traffic revenues was only 39 per cent.

It is also seen that Phase-I of Rapid Metro revolves around Cyber City, a business zone, but the bulk of employees here do not live around the Rapid Metro line. The Phase-2 alignment along the Golf Course Road was a non-starter because the area neither has density, nor mixed-income groups. On the other hand, old Gurugram on the opposite side of NH 48 has all the elements that could ensure high ridership, but it doesn’t have a single Metro line.

As things stand, no jugglery in the guise of loan restructuring or takeover will make the project viable, unless the entire outstanding capital of Rs  3,770 crores is written-off and borne by either the banks or the state of Haryana. In the former case, the burden will be spread across the people of India whereas in the latter case, the burden will be borne by the people of Haryana. The public loss of Rs 3,770 crore does not include land for right of way and depots which were given away almost free to the concessionaire companies.

Khemka says the only beneficiaries of the Metro were the owners of commercial properties along the Metro Corridors since, according to a policy notified on February 9, 2016, the permissible Floor Area Ratio (FAR) was increased, which benefitted the following companies:

DLF: Increase in FAR from 250 to 350 for 37 acres (IT/ITES) in CyberCity. This translates to an increase in FAR by 16,11,720 sq. feet. A conservative estimate of the benefit value is at least Rs 1,000 crores.

Orchid: Increase in FAR from 175 to 350 for three acres (commercial) in Sector 53. This translates to an increase in FAR by 2,28,690 sq. feet. A conservative estimate of the benefit value is at least Rs 200 crores

< Figures are as quoted in Khemka’s letter >

Khemka adds that properties along the Metro corridor witnessed a jump in prices and rentals by 10 to 15 per cent. Consequently, if the Metro Rail were to stop operations, the loudest noise will emanate from these property owners as their properties will witness a slump in prices and rentals.

**Errata: Ashok Khemka’s birthplace was mistakenly referred to as Bangalore in the initial published version

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