CAG finds ₹6,603.39 crore extra land costs in Bangalore Metro project

The audit covered the period from the corporation's inception up to March 2021, with financial figures updated to March 2023.

Who it concerns: Bangalore Metro Rail Corporation Limited (BMRCL), a joint venture of the Government of India and Government of Karnataka, under the Ministry of Housing and Urban Affairs.

What the auditor found

• Land acquisition costs increased by ₹6,603.39 crore (₹835.81 crore for Phase 1 and ₹5,767.58 crore for Phase 2) due to improper estimation and delays.
• Excess land compensation of ₹294.72 crore was paid because BMRCL adopted non-agriculture land rates for agriculture land or added attributes applicable only to converted land.
• Additional interest of ₹186.86 crore was paid to landowners due to delays in issuing Final Notifications beyond the 270-day timeline prescribed by the High Power Committee.
• Excess compensation of ₹31.35 crore was paid in Phase 2 because BMRCL applied higher percentage increases to market value than prescribed by the Government of Karnataka guidelines.
• BMRCL did not install Platform Screen Doors (PSDs) in Phase 1 underground stations, missing out on projected annual savings of ₹6.58 crore in air conditioning and maintenance costs.
• Rails procured had hardness values (260-330 BHN) below the standard range (340-390 BHN) in 34 of 36 locations, potentially increasing maintenance costs and reducing rail/wheel life.
• Ridership projections used for Financial and Economic Internal Rate of Return (FIRR/EIRR) calculations were overestimated, with actual 2021 traffic (6,429-8,852) far below the 15,000 threshold required to justify Heavy Metro investment.
• BMRCL lacked a Procurement Manual, leading to a lack of uniformity in cost estimates and guidelines for project duration, package size, and advance releases.

Also in the document

• CAG found that the total increase in land acquisition costs due to estimation errors and delays amounted to over ₹6,600 crore.
• CAG noted that BMRCL continued using an older Distance to Go (DTG) signaling system instead of the more advanced Communication Based Train Control (CBTC) system, which was available at the time, forcing the use of the older system in Phase 2 extensions.
• CAG observed that Multi-Modal Integration (MMI) was not operational at eight locations as of March 2023, despite Phase 1 being fully operational since June 2017.