Barclays: $140-bn investment needed in urban transport by '30

Mar 20 2014, 20:23 IST
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The country needs to invest around USD 140 billion by FY'30, according to a Barclays report. Reuters The country needs to invest around USD 140 billion by FY'30, according to a Barclays report. Reuters
SummaryBarclays report suggests the country needs over 2,500 km of metro rail and 5,500 km of BRTS network.

To strengthen the urban transport system, the country needs to invest around USD 140 billion by FY'30, according to a Barclays report.

"Increasing urbanisation is pushing up vehicle sales amid constraints on increasing road density. This will lead to increased spends on transport infrastructure and we see this emerging as a multi-year capex theme," the report said.

Barclays assessment of 35 major cities on various socio-economic parameters suggests that mass transit rail systems should be a high priority in 12 cities with bus rapid transit systems (BRTS) acting as feeder services.

The report suggests the country needs over 2,500 km of metro rail and 5,500 km of BRTS network.

"These metro lines should be integrated with other transport modes, with monorail and BRTS serving as feeders. Thus, we envisage investments of USD120 billion in metro rail and USD20 billion in BRTS by FY30," the report said.

There has been a rapid increase in population in the last decade and is not expected to slow down in the coming decade given continued migration, the report said.

"With the increase in population and rising incomes there has been a rapid growth in the number of vehicles. However, the pace of road network expansion has been slow and the state of public transportation is poor, leading to a host of problems like traffic congestion, high road accidents and pollution," it said.

The development of mass transport systems has been tardy, led by issues with project conceptualisation, approvals and funding, Barclays said.

Only two of the 53 cities (65 by 2021) with population of one million or more have metro rail systems of any significant length operational. Progress on monorail is limited with several projects still at the concept stage. BRTS have been commenced in multiple cities, but considerable progress has only been seen in Ahmedabad, it said.

Emphasising the need for BRTS along with the metro and rails, the firm said, "metros, monorails and railways cannot cover the entire city, so in addition to these there is also a need for a rapid bus transport network.

"While current vehicle penetration is low, with less than 25 per cent of travellers owning their vehicles, the lack of adequate road capacity leads to significant congestion. Rapid bus transit systems are hence needed to tackle both traffic congestion and the problem of increasing pollution levels in various cities."

Barclays further pointed out that without financial support from the government, metro projects will be inviable.

"Our analysis suggests that a substantial amount of property development rental rights need to be given to the concessionaire, along with viability gap funding by the government, to make the metro rail projects commercially viable," it said.

Besides, there should also be a proper regulatory mechanism with dispute resolution mechanism clearly documented.

"There should also be a proper process to assess damage and cost escalation. Cost escalation due to delay should be clearly defined, and private companies should be penalised only for the delays caused due to activities under their control," it said.

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