L&T has no clue how to work out metro rail cost

Although it is committed to deliver the Hyderabad Metro Rail five years from now, (L&T), the contractor for the project, is not in a position to estimate its likely cost with the situation being seen as too dynamic for company boss to make any guess/
By: Times of India/Hyderabad
June 30, 2012 - PRLog -- Vivek B Gadgil, chief executive and managing director of L&T Metro Rail (Hyderabad), said: "The situation is so dynamic that the cost of the project cannot be estimated. It depends on many factors, such as currency fluctuation, floating interest rate and inflation. Even the vendors for the project are not settled and the cost is anybody's guess at this stage." He was talking to reporters following a visit to the Uppal pre-casting yard organised by L&T for the media on Friday.

While he did agree that escalation of the cost caused by delay in completion of the project was of major conce, Gadgil said that speeding up the work and driving a hard bargain with the vendors would help rein in expenses. With each day's delay costing Rs 5 crore, the estimated outlay is feared to have reached Rs 20,000 crore, that is, over three times the original budget of Rs 6,200 crore, drawn up when the project was conceived in 2006.

Responding to a query on the recovery of investment, Gadgil said that L&T could not depend on ticket pricing as the fare notification had already been issued. According to the notification, annual revision of fare would be effective at the beginning of each financial year and follow the prevailing wholesale price index (WPI).

Gadgil said that localizing vendor services is one cost-saving option which L&T was looking at. While preparations are on to invite global tenders for supply of rolling stock, railway signalling, track works, automatic fare collection and communication systems, vendors would be asked to base their manufacturing operations in India. While many companies, both Indian and abroad have been shortlisted, fierce bidding is expected from BEML-Hyundai ROTEM, CSR-Zhuzhou Electric Locomotive Co, Bombardier and CAF for supply of rolling stock.

Kyosan, Nippon, and Siemens are among the shortlisted companies for supplying the signals. Corus Inteational (India) Ltd, Mitsui and Arcelor Mittal are expected to vie for supplying the track works. Singapore Technologies, Samsung, Indra and Thales have been shortlisted as the contenders for providing the automatic fare collection system.

Gadgil said L&T had not taken on the bank loan for the project as the work is yet to be taken up in right eaest although about Rs 450 crore has already gone into it. He said that the physical duties, like the erection of piers along the stretch between Nagole and Mettiguda, have been fast-tracked with the pre-casting yard in Uppal having gone operational. While setting a deadline of five years for the entire project, Gadgil hoped that the first stretch, between Nagole and Mettiguda, would be operational within three years.

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