Japanese ODA Loan

Ex-Ante Evaluation (for Japanese ODA Loan)
1. Name of the ProjectCountry: India
Project: Chennai Metro Project (II)Loan Agreement: March 31, 2010
Loan Amount: 59,851 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, traffic
congestion 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 mentionedabove. 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 of 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 reforms 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 reforms. The amount ofapproved loans in the transport sector is 7,464 million USD (as of December 2009).
(5) Necessity of the Project
The Chennai metropolitan area in the State of Tamil Nadu has the fourth largest populationin India, and is the largest metropolitan area in southern India. Its population has increased
rapidly from 4.50 million in 1981 to 7.06 million in 2001, and has now reached 7.60 million.
With the population density of 24,000 people/km2 (cf. 13,000 people/km2 in Tokyo 23 wards),
Chennai is one of the most overpopulated cities in the world. In line with the population
increase, the number of registered vehicles has also increased dramatically, more thandoubling from 1991 to 2001. As a result, the current average travel speed on major city roads
is approximately 15 km/h, and traffic congestion is severe. On the other hand, since it isdifficult to expand the transport capacity of existing public transportation (buses and trains) as
well as the road network system, the development of a mass rapid transit system to ease theheavy traffic and reduce vehicle-related pollution has become the major countermeasure in
the urban transportation and environmental policy of the Government of Tamil Nadu.
Therefore, JICA’s assistance for the Project is highly necessary and relevant.
3. Project Description(1) Project Objective(s)The objective of the Project is to cope with the growing traffic demand in the Chennai
metropolitan area in the State of Tamil Nadu, by developing the mass rapid transit system,
thereby contributing to regional economic development and improvement of the urban
environment through alleviation of traffic congestion and reduction of traffic pollution(2) Project Site/Target Area
Chennai metropolitan area in the State of Tamil Nadu
(3) Project Component(s)The Project aims to develop a mass rapid transit system with two lines totaling
approximately 43 km in length in the Chennai metropolitan area. The portions of the Project
covered by Japanese ODA Loans are as follows.
1) Civil work (24 km underground [including 20 subway stations], trackworks for all theline, etc.)
2) Electrical and Signaling & Telecommunication System
3) Procurement of Rolling Stocks
4) Consulting services (tender assistance, construction monitoring and supervision etc.)(4) Estimated Project Cost (Loan Amount)
378,138 million Yen (Loan Amount: 59,851 million Yen)
(5) Schedule
November 2008 – March 2015 (77 months). Project completion is scheduled in March2015 as metro train services become available along the entire line.
(6) Project Implementation Structure1) Borrower: The President of India
2) Executing Agency: Chennai Metro Rail Limited (CMRL)
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 theProject is classified as Category A.
(iii) Environmental Permit: The Environment Impact Assessment (EIA) report for thisproject was prepared in May 2008, although EIAs are not mandatory for suchprojects in India.
(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 land acquisition of 7.45 ha. A total of 531
households (502 for squatters) and 201 shops need to be resettled. CMRL areholding discussions with those affected by land acquisition and resettlement, The
land acquisition, resettlement and compensation are scheduled to proceed pursuant
to Land Acquisition Act and the resettlement action plan prepared by CMRL.
(vii) Other / Monitoring: CMRL is monitoring noise, vibration, air quality, water quality,soil contamination, land acquisition, resettlement, etc. in the Project.
2) Promotion of Poverty Reduction
None3) Promotion of Social Development (e.g. Gender Perspective, Measure for Infectious
Diseases Including HIV/AIDS, Participatory Development, Consideration for the
Person with Disability etc.):
Many of the migrant workers employed by the Project live alone, and the risk of
HIV/AIDS infection is considered high. For this reason, HIV/AIDS prevention
activities are scheduled to be implemented. In addition, the stations and coaches will be
designed taking into consideration of needs of the elderly and the physically challenged(e.g. user-friendly design of elevators and restrooms, announcements at stations, signsin 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 (2017)[Expected value 2 years after project completion]

Operating rate (%/year)

92

Running distance (1000km/day)

71.2

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

409

Volume of transportation(million persons-km/day)

7.3

Income from Passengers(million rupees/day)

11.3(2) Internal Rate of Return
Based on the conditions indicated below, the Economic Internal Rate of Return (EIRR)
for the Project is 13.25%; the Financial Internal Rate of Return (FIRR) for the Project is
2.16%.
[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 ofridership of the metro system is essential for financial soundness of CMRL, Tamil Nadu State
Transport Authority is to rationalize bus routes so that the metro does not compete with bus
passengers’demand and buses play a role of feeder networking for the metro. Moreover,
CMRL is planning several businesses related to the metro such as advertising and property
development in order to further improve the financial standing of the Project.
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)