Japanese ODA Loan

Ex-Ante Evaluation (for Japanese ODA Loan)
1. Name of the ProjectCountry: India
Project: Kolkata East-West Metro Project (II)Loan Agreement: March 31, 2010
Loan Amount: 23,402 million Yen
Borrower: The President of India
2. Background and Necessity of the Project(1) Current State and Issues of the Urban Transport Sector in India
India is experiencing rapid urbanization. While the registered number of automobiles andmotorcycles are surging (with annual average growth of 11% since 1997), the development ofpublic transportation infrastructure is much lagging. As a result, traffic congestion due to theincreased number of automobiles and motorcycles is becoming a serious problem in urban
areas. Particularly, in metropolitan cities such as Delhi, Kolkata and Chennai, trafficcongestion accompanying the rise in road traffic demand is becoming a critical issue. Since
this is causing economic loss and health hazards due to air, noise and other forms ofvehicle-related pollution, there is an urgent need to introduce a public transportation system toalleviate traffic congestion and vehicle-related pollution.
(2) Development Policies for the Urban Transport Sector in India and the Priority of theProject
In its Eleventh Five Year Plan (April 2007–March 2012), the Government of India has
placed emphasis on development of urban transport sector to mitigate the issues mentioned
above. In particular, the construction of mass transit systems is recommended for cities with apopulation of more than 4 million.
(3) Japan and JICA’s Policy and Operations in the Urban Transport Sector
The “Promotion of Economic Growth” is one of the prioritized areas in the Japan’s Country
Assistance Program for India by the Government of Japan. Accordingly, JICA has set the“Promotion of Sustainable Growth through the Development Assistance to the Infrastructure”
as a prioritized area. The Project is categorized under the “Improvement of Transport Networks”
program within the said priority area, therefore the assistance for the Project is consistent withJapan and JICA’s policy. Regarding Japanese ODA Loans for India, 33 projects totaling 586,333
million Yen have been extended in the transport sector, comprising 17 projects totaling
513,338 million Yen in the urban transport sector. Concerning technical cooperation and grants,experts in the fields of rolling stock maintenance and safety management were dispatched in2008 for the Delhi Mass Rapid Transport System Project.
(4) Other Donors’ Activities
The World Bank has focused its assistance on increasing transport capacity through roadinfrastructure development and institutional reform in the road sector, and subsequently theapproved loans in the transport sector amounts to 16,702 million USD (as of June 2009). The
Asian Development Bank (ADB) is also engaged in infrastructure development such as
national highways / state roads and capacity building & institutional reform. The amount ofapproved loans in the transport sector is 7,464 million USD (as of December 2009).
(5) Necessity of the ProjectWith the population density of 25,000 people/km2 (cf. 13,000 people/km2 in Tokyo 23wards), Kolkata city is one of the most overpopulated cities in the world. The Kolkata
metropolitan area relies heavily on road traffic as a mode of transportation, as evidenced by
the fact that public and private-company bus lines have a 68% share of the city’s mode oftransport, compared to 25% for suburban/circular railway, 2% for tram, 2% for existing
subways, and 3% for ferries. However, since the area under transport usage in Kolkata city ismere 6% and extremely small in comparison with many other major Indian cities (23% inDelhi and 18% in Mumbai), traffic congestion is becoming a serious problem. On the otherhand, since it is difficult to expand the transport capacity of existing public transportation(buses and trains) as well as the road network, development of mass rapid transit system toease the heavy traffic and reduce vehicle-related pollution has become the majorcountermeasure in the urban transportation and environmental policy of the Government ofWest Bengal. Therefore, JICA’s assistance for the Project is highly necessary and relevant.
3. Project Description(1) Project Objective
The objective of the Project is to cope with the growing traffic demand in the Kolkata
metropolitan area in the State of West Bengal, by developing a mass rapid transit system,
thereby contributing to regional economic development and improvement of the urbanenvironment, through alleviation of traffic congestion and reduction of traffic pollution.
(2) Project Site/Target Area
Kolkata metropolitan area, in the State of West Bengal(3) Project Components
The Project aims to develop a mass rapid transit system in the East-West direction totaling
approximately 14 km in length between Howrah Maiden and Salt Lake in the Kolkata
metropolitan area. The portions of the Project covered by Japanese ODA Loans are asfollows.
1) Underground Civil Work (9 km underground [including 6 subway stations])
2) Signaling and Telecommunication System
3) Automatic Fare Collection System
4) Procurement of Rolling Stocks5) Consulting Services (basic design, construction monitoring and supervision etc.)(4) Estimated Project Cost (Loan Amount)
140,199 million Yen (Loan Amount: 23,402 million Yen)
(5) Schedule
March 2008–March 2015 (85 months). Project completion is scheduled in October 2014 asmetro train services become available along the entire line.
(6) Project Implementation Structure1) Borrower: The President of India
2) Executing Agency: Kolkata Metro Rail Corporation Limited (KMRC)
3) Operation and Maintenance System: same as 2) above(7) Environmental and Social Consideration/Poverty Reduction/Social Development
1) Environmental and Social Consideration(i) Category: A(ii) Reason for Categorization: The Project falls under the category of a railroad sector
project which is likely to have a significant adverse impact on the environment
under the “Japan Bank for International Cooperation Guidelines for Confirmation ofEnvironmental and Social Consideration” (established in April 2002). Thus thisproject is classified as Category A.
(iii) Environmental Permit: The Environment Impact Assessment (EIA) report for theProject was approved by the Department of Environment of the State of West Bengalin November 2006 and September 2007 pursuant to the regulations of the State.
(iv) Anti-Pollution Measures: With regard to noise pollution, noise reduction measures
including soundproof walls and sound insulating pads are scheduled to be adopted.
(v) Natural Environment: Because the project’s site is located in an urban area and theplanned route generally runs along existing roads, it is likely to have minimum
adverse impact on the natural environment.
(vi) Social Environment: The Project requires the land acquisition of 18.74 ha. A total of
490 households need to be resettled. KMRC are holding discussions with thoseaffected by land acquisition and resettlement. It is scheduled that land acquisition,resettlement and compensation procedures pursuant to the Land Acquisition Lawand the resettlement action plan prepared by KMRC will be completed by March2011.
(vii) Other / Monitoring: KMRC is monitoring noise, vibration, soil, air quality, water
quality, land acquisition, resettlement, etc. in the Project.
2) Promotion of Poverty Reduction:None
3) Promotion of Social Development (e.g. Gender Perspective, Measure for Infectious
Diseases Including HIV/AIDS, Participatory Development, Consideration for the Personwith Disability etc.):
Many of the migrant workers employed by the Project live alone, and the risk ofHIV/AIDS infection is considered high. For this reason, KMRC in cooperation withlocal NGOs will undertake HIV/AIDS prevention activities by its own funds as a formof social contribution. At the same time, as a working environment policy, HIV/AIDS
prevention clauses are inserted in tender documents, and each contractor is expected tocooperate with efforts to prevent HIV/AIDS infection. In addition, the stations andcoaches will be designed taking into consideration of needs of the elderly and thephysically challenged (e.g. user-friendly design of elevators and restrooms,
announcements at stations, signs in Braille, space for wheelchairs).
(8) Collaboration with Other Donors:
None(9) Other Important Issues:None
4. Targeted Outcomes(1)

Performance Indicators (Operation and Effect Indicator)
Indicator

Target (2016)[Expected value 2 years after project completion]

Operating rate (%/year)

85.7

Running distance (1000km/day)

27.2

Number of running trains(number of trains/day, one direction)

328

Volume of transportation(million persons-km/day)

3.41

Income from Passengers(million rupees/day)

5.16(2) Internal Rate of Return
Based on the conditions indicated below, the Economic Internal Rate of Return (EIRR)
for the Project is 16.35%; the Financial Internal Rate of Return (FIRR) for the Project is
1.28%.
[EIRR]
Cost:
Project cost (excluding tax), operation and maintenance expenses
Benefit:
Savings of vehicle operating cost (fuel consumption) and maintenance cost,savings of the metro and road passenger travel time, savings on vehicle
operating cost by alleviating congestion (time factor), savings fromdecrease of accidents, reduction of traffic pollution
Project Life: 30 years[FIRR]
Cost:
Project cost, operation and maintenance expenses
Benefit:
Revenue from the metro passenger, advertisement and property
Project Life: 30 years
5. External Factors and Risk Control
Changes in transport demand6. Lessons Learned from Past Projects
From the ex-post evaluation of previous railroad and metro projects, it has been learnt thatthe establishment of a financially independent project implementation structure is importantfrom the standpoint of ensuring proper operation and maintenance. Since improvement ofridership of the metro system is essential for financial soundness of KMRC, the Governmentof West Bengal is expected to rationalize the bus routes so that the metro does not competewith bus passengers’demand and buses play a role of feeder networking for the metro.
Moreover, KMRC is planning several businesses related to the metro such as advertising andproperty development in order to further improve the financial standing of the Project. Fromthe ex-post evaluation of former “Calcutta Metro Railways Construction Project”, inparticular, it should be noted that careful consideration on the factors that may affect thecredibility of the construction period, such as technical feasibility or land acquisition andresettlement, is important in order to avoid delays in the case where construction isundertaken in densely populated areas.
7. Plan for Future Evaluation(1) Indicators to be Used
1) Operating rate (%/year)
2) Running distance (100km/day)3) Number of running trains (trains/day, one direction)4) Volume of transportation (million persons-km/day)
5) Income from Passengers (million rupees/day)
6) Internal rate of return: FIRR (%), EIRR (%)(2) Timing
Two years after the project completion(END)