DELHI METRO RECEIVED STRONG INTEREST FOR ITS TRAIN LEASE TENDER

Delhi Metro Rail Corporation (DMRC) is the largest urban rail system in India, with total length of 231 km in the city of Delhi. After the completion of Phase-III in 2018, DMRC will be operating 350 km of metro network. Metro system in Delhi will become the fourth larget metro network in the world with a total length of 350 kms, after Shanghai (588 km), Beijing (574 km) and London (402 km).

DMRC is expanding its network by adding new lines. However, it also requires an investment in the replacement of aging assets. The existing Rolling Stock on Line-5 has to be replaced with New Stock. In order to meet its requirement, DMRC is looking to encourage private investment and invited Expressions of Interest (EOI) who will provide 150 cars (25 trainsets of six cars each) on a lease basis for the Line-5 and maintaining these cars during their life cycle against payment of lease/rental charges on the basis of hourly availability of trainsets.  Both the Existing Stock and New Stock will run simultaneously during the period of introduction of new trains acquired on lease. 

This lease proposal is based on a new  public-private partnership (PPP)  model,\ which Indian Railways is testing for the first time. Under this model,  DMRC will not have to make an initial capital investment or incur any maintenance costs during the coaches’ entire 30-year life cycle. DMRC will pay the the concessionaire the rented trains for hours and  guaranteeing the hourly requirement of the trains.  DMRC has received 11 expressions of interest (EoI) from 6 financiers and 5 manufacturers of rolling stock. The private companies are willing to sign a tripartite agreement with DMRC to manufacture, finance and lease buses for a period of 30 years. The companies are:

Financial entities
- Mitsubishi Financial Group
- Mitsui & Co
- Equus Asia
- National Infrastructure Investment Fund (NIIF)
- IL&FS Financial Services
- I-Squared Capital
 
Manufacturers of rolling stock
- Bombardier Transportation (Canada)
- Alstom Group (France)
- Construcciones y Auxiliar de Ferrocarriles de España (Spain)
- BEML Limited (India)
- CRRC Zhuzhou Locomotive Company (China)
 

DMRC is planning to complete the EOI evaluation by March 2018 and will release Request for Proposal (RFP) to shortlisted bidders.  The concessionaire will have to present the hourly availability rate of the trains. DMRC will calculate the net present value (NPV) of the rate quoted by the companies. The company, which will offer the best NPV, will be the preferred provider and will be selected. It is planning to complete the bidding process by July or August 2018.  If the first pilot is successful, the DMRC can request another 100 coaches under the terms of the contract, bringing the total number of leased coaches to 250.

This is unique initiative as it will open up market for private players and will allow new metro operators in the country to reduce their capital investment.  If successful, the model could have a significant impact on metro projects being executed across the country.  These models to finance and hire trainers exist in Australia, the United Kingdom and throughout Europe