Japan ODA Loan

Ex-Ante Evaluation (for Japanese ODA Loan)
1. Name of the ProjectCountry:
India
Project:
Mumbai Metro Line III Project
Loan Agreement:
September 17, 2013
Loan Amount:
71,000 million yen
Borrower:
The President of India
2. Background and Necessity of the Project(1) Current State and Issues of the Urban Transportation Sector in India
India is experiencing rapid urbanization. While the registered number of automobiles and motorcycles aresurging, the development of public transportation infrastructure is much lagging. As a result, traffic
congestion due to the increased number of automobiles and motorcycles is becoming a serious problem inurban areas. Particularly, in metropolitan cities such as Delhi, Mumbai 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 of vehicle-related pollution, there is an urgent
need to introduce a public transportation system to alleviate traffic congestion and vehicle-related
pollution.
(2) Development Policies for the Urban Transportation Sector in India, and Priority of theProject
To address the above problem, through the Working Group on Urban Transportation for the 12thFive-Year Plan (April 2012 to March 2017), the Government of India recommended the establishmentof metro construction plans in cities with a population of more than two million and the beginning ofconstruction in cities with a population of more than three million from the viewpoint of safety, energy
efficiency, and social environment conservation, to develop the urban transportation sector. This project
supports the plan.
(3) Japan and JICA’s Policy and Operations in the Urban Transportation Sector in India
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 ofSustainable 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 saidpriority area; therefore the assistance for the Project is consistent with Japan and JICA’s policy. JICA
has so far approved yen loans to the urban transportation sector in 23 cases. The total amount of the yenloans is 826.7 billion yen (71.8% of the approved amount of yen loans to the transportation sector).
(4) Other Donors’ Activities
In the urban transportation sector, the World Bank is supporting Mumbai’s urban transportation project(development of roads and suburban railways) and the development of the Eastern Corridor under thefreight railway construction plan. The Asian Development Bank is supporting the railway sector,
focusing on support of “soft (non-physical)” aspects, such as organizational reform of the IndianRailway.
(5) Necessity of the Project
The Mumbai metropolitan region, the capital of the State of Maharashtra, has a population of 20.75
million as of 2011, making it the largest among India’s urban areas. Mumbai City, the center of theregion, has a population density of 20,694 persons/km2 and is one of the densest cities in the world. The
number of registered automobiles has sharply increased from 1.03 million in 2000 to 1.77 million in1

2011. Because of this, the average speed on the main roads in the city is about 15 km/hour, resulting inserious traffic jams. Because it is difficult to expand the road networks due to lack of sites and toimprove the transportation capacity of buses, the existing public transportation, it is imminently
necessary to develop a mass rapid transit system as a measure for mitigating traffic jams and copingwith auto pollution. The Project is the main pillars of the urban transport policy and urban
environmental measures to ease traffic congestion in the metropolitan region; JICA’s assistance for theProject is highly necessary and relevant.
3. Project Description(1) Project Objective
The objective of the Project is to cope with the increase of traffic demand in Mumbai, the capital of theState of Maharashtra, by constructing a mass rapid transportation system, thereby promoting regional
economic development and improving the urban environment through mitigation of traffic jams andreduction of traffic pollution.
(2) Project Site / Target Area
The Mumbai metropolitan region in the State of Maharashtra(3) Project Components
Construction of the whole Line III among the Urban Railway Development Plan Phase I in Mumbai(total length of Lines I to III: 77.7 km)
1) Civil works, electrical and signaling & telecommunication system (total length of metro: 33.5km (including 27 metro stations))
2) Procurement of rolling stocks
3) Consulting service (design review, bidding assistance, construction supervision, management
improvement, etc.)(4) Estimated Project Cost
346,659 million yen (loan amount this tranche: 71,000 million yen)(5) Schedule
Planned for the period between June 2013 and December 2019 (79 months in total). The Project will
be completed at the service opening of the facilities (December 2019).
(6) Project Implementation Structure1) Borrower: The President of India
2) Executing Agency: Mumbai Metro Rail Corporation (hereinafter referred to as “MMRC”)
3) Operation and Maintenance System: MMRC is planning to choose a private operatingcompany by bidding instead of directly operating and maintaining the metro business.
(7) Environmental and Social Considerations
1) Environmental and Social Considerations: as described in the Annex
2) Promotion of Poverty Reduction: MMRC is planning to set fares with consideration for thelow-income class; the Project takes into consideration the poor people in the Mumbai urbanarea.
3) Promotion of Social Development (gender issues, measures against AIDS and other infectious
diseases, participatory development, consideration for the disabled, etc.): The executing
agency hires an NGO to carry out HIV prevention activities for itinerant workers and local
2people.
(8) Other schemes, cooperation with other donors: None in particular(9) Other Important Issues: None in particular
4. Targeted Outcomes(1) Quantitative Effects
1) Performance Indicators
Indicator
Operating rate (%/year)

Target (2021)[2 years after projectcompletion]
87

Running distance (thousand km/day)Number of running trains(number of trains/day, one direction)
Volume of transportation(million persons-km/day)
Passenger revenue (million rupees/day)

73676
12.9
26.32) Internal Rates of Return
Based on the assumptions below, the economic internal rate of return (EIRR) for the Project will be
13.00% and the financial internal rate of return (FIRR) will be 0.24%.
[EIRR]
Costs:
Benefits:

Project life:

Project costs (excluding tax); operation, maintenance, and management costs
Reduction in operation, maintenance, and management costs related to transportation
facilities and roads; reduction in transportation time for users of this line and othertransportation facilities; reduction in the operation, maintenance, and management costsof bus and other transportation systems because of mitigation of traffic jams; mitigationof pollution; and decrease in the number of traffic accidents
30 years[FIRR]
Costs:
Benefits:
Project life:

Project costs (excluding tax); operation, maintenance, and management costs
Fare revenue; advertising revenue; real estate development revenue
30 years(2) Qualitative Effects
Improvement of the traffic conditions in the Mumbai metropolitan region; mitigation of traffic
pollution; mitigation of climate change; improvement of convenience by securing the timeliness oftransportation; economic development in the Mumbai urban area35. External Factors and Risk Control
Worsening of the political and economic situations and occurrence of natural disasters in India and in
the areas around the target area
6. Results of Evaluations and Lessons Learned from Past Projects(1) Results of Evaluations of Similar Past Projects
The ex-post evaluations of the past urban railway projects in India has given the lesson that it isimportant to establish a financially independent project implementation system. Moreover, in theex-post evaluations of projects where removal of local residents frequently occurred, it is pointed outthat it is necessary to take measures for securing the livelihoods and standard of living of the residents
to be removed, such as the establishment of a livelihood improvement program.
(2) Lessons for the Project
Based on the foregoing lessons, in the Project, relevant programs for advertising, real estatedevelopment, etc. are planned to be carried out to improve the financial standing of the executing
agency. For the benefit of the residents to be removed, necessary procedures have been carried out,
including the holding of explanation meetings, and the acquisition of sites and the removal of residents
have been gradually carried out. In addition, the results of monitoring surveys on the living conditionsof slum residents after removal will be reported regularly from MMRC.
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 project completion

4Annex
India “Mumbai Metro Line III Project”
Environmental and Social Considerations(1) Category: A(2) Reason for Categorization
The Project falls under the railway sector in the JICA Guidelines for Environmental and Social
Considerations (promulgated in April 2010; hereinafter referred to as the “JICA Guidelines”)
and has influential characteristics.
(3) Environmental Permit
Although no domestic law in India obliges the preparation of an environmental impact
assessment (EIA) report, it was prepared in September 2012.
(4) Anti-Pollution Measures
During the construction, measures will be taken to control pollutants and properly manage
construction vehicles and heavy machines. With regard to the impact of the construction on theground, because adoption of the shield method prevents the loosing of the ground and theinflow of groundwater, no serious impact of subsidence was anticipated. After the beginning of
the service, soundproof walls will be used for noise reduction, elastic rubber will be used under
the line for vibration reduction, and measures for mitigating water pollution, such as theinstallation of drainage facilities in the vehicle base, will be taken. In addition, because, at theconsultation with local people about the EIA report on the Project, the local people expressed
anxiety about how to dispose of construction waste soil and requested the restriction ofconstruction during the nighttime, the executing agency made a definite promise to carry out
and monitor mitigation measures. The local people did not make any special objection against
the Project.
(5) Natural Environment
Because the target area is not susceptible to the influence of any national park and is not
located around any national park, undesirable impact on the natural environment is supposed tobe minimal.
(6) Social Environment
The area of sites to be acquired for the Project is about 45.81 ha (including about 4.72 ha ofprivate land). It is estimated that 1,442 households and 5,335 residents will have to move
involuntarily. MMRC has begun to consult with the site owners and the residents. It will follow
the procedures according to the resident removal plan (based on the Site Acquisition Act and
the Government of the State of Maharashtra’s resident removal policy) that has been
established so as to fulfill the requirements specified in the JICA Guidelines and is planning to5

complete the procedures for site acquisition, resident removal, and compensation in December
2013. In addition, illegal residents will be given ownership of a lot of land for public housing inthe suburbs of Mumbai or removal expenses. Because, at the consultation about resident
removal, the participating residents demanded proper payment of compensation, provision of
new residences with good living conditions, and provision of job opportunities related to theProject, the executing agency gave explanations about the resident removal procedure thatreflected the influenced residents’ requests and about the compensation policy. The local people
did not make any special objection against the Project.
(7) Others/Monitoring
In the project, MMRC will monitor site acquisition and resident removal during theconstruction. Moreover, under the supervision of MMRC, the contractor will monitor noise,vibration, soil, air quality, water quality, waste, etc. After the beginning of the service, MMRC
will monitor noise, vibration, air quality, water quality, etc. In addition, MMRC will hire an
outside consultant by its own funds to monitor site acquisition, resident removal, and living
conditions after removal.
(8) Conclusion
It is unlikely that the above-mentioned environmental and social considerations will cause theProject to have serious and undesirable impact. However, after the signing of the loanagreement, it is necessary to check the following regularly during the implementation stage of
the Project:
1. Site acquisition and involuntary resident removal
2. Implementation and monitoring of mitigation measures during the construction (especially,influence of air quality, noise, waste, etc.)
3. Implementation and monitoring of mitigation measures during the provision of the service(especially, influence of vibration)

6