The Delhi Airport Metro Express – a high-speed dedicated airport rail link and the first privately developed and financed section of Delhi Metro – will be open at the time of the city’s hosting of the Commonwealth Games in October 2010.

Modeled along the lines of airport express links in London, Hong Kong and Kuala Lumpur, the proposed link will have state-of-the-art facilities: the most modern communication and train control system, air-conditioned coaches, sophisticated signaling and baggage handling systems, and the like. The line will connect the 23km stretch from New Delhi Railway Station to the city’s international airport, and will cut down both the travel time to around 20 minutes and the cost of travel.

With the aim of establishing a world-class metro railway, in 1998 Delhi Metro Rail Corporation Ltd. (DMRC) embarked upon the ambitious task of building a network to cover the whole of Delhi by 2021. DMRC can now boast 111kms of operational line, covering 98 stations, while several other lines are under construction. By 2020, the metro rail network will be over 400kms, thereby making it longer than the London Underground.

Given the timeline and upcoming Commonwealth Games, DMRC opted to invite private participation for speedy completion of key planned stretches. Through the international competitive bidding route, Reliance Anil Dhirubhai Ambani Group (R-ADAG) was awarded the 23km Airport Express Link, connecting city centre to the airport and further down to Dwarka.

The project is being developed via Delhi Airport Metro Express Private Limited (DAMEPL), a special purpose company formed by Reliance Infrastructure Limited (Rel Infra), the flagship company under R-ADAG and Construcciones Y Auxiliar De Ferrocarriles, S.A, Spain (CAF), a leader in rolling stock manufacturing. The project envisages both underground and elevated stretches of line.

Under the present arrangement, DMRC has responsibility for completion of all the civil works for the line as well as the stations, while DAMEPL is primarily responsible for procurement of the rolling stock, setting up of signaling telecommunication, track works, electric works, etc. and also to operate the link for a period of 30 years (including the construction period). DAMEPL is being assisted by globally renowned consultants and system contractors on design, installation, testing and commissioning related activities.

As per the concession agreement between DMRC (the nodal agency) and DAMEPL, a maximum fare of just US$3.4 per person per trip can be charged by DAMEPL. The deal includes a revenue-sharing arrangement, with a specific percentage of the total realizable revenue from the project, being paid to DMRC every year. Apart from the passenger revenue, DAMEPL proposes to get substantial non-fare revenue from associated retail, real estate development and advertisements.

The project entails an investment of over US$655 million (US$1 = Rs44), with an unconventional structuring. The project debt has been funded at a debt:equity ratio of 70:30, with a mixture of both rupee and foreign currency loans from a set of Indian banks/ financial institutions. Axis Bank was the sole lead arranger for the entire debt requirement of US$459 million. In terms of financing, the borrower has an option to replace the undisbursed rupee loan portion by foreign currency loans, thereby providing an option to reduce the overall borrowing costs for the project.

The project achieved financial close in March 2009, with Rs17.55 billion of rupee term loan and US$54 million (considering US$1 = Rs49) of external commercial borrowing (ECB). While rupee lenders consisted of Allahabad Bank (Rs1.5 billion), Andhra Bank (Rs1 billion), Axis Bank Ltd. (Rs3.3 billion), Bank of India (Rs2 billion), Canara Bank (Rs2 billion), Central Bank of India (Rs2 billion), Dena Bank (Rs2 billion), Punjab and Sind Bank (Rs1.5 billion) and UCO Bank (Rs2.25 billion); India Infrastructure Finance Company (UK) Ltd. was the sole ECB lender with a US$54 million exposure. Axis Bank is the lenders’ agent and India Law Services the lenders’ legal counsel.

The debt comprises a relatively long door-to-door tenor of 17.25 years, with a post construction grace period of 20 months and repayments in 56 unequal quarterly installments, commencing April 1, 2012. In order to mitigate the risk of holding the exposure in the lenders’ books for such a long tenure, a put & call option has been built-in at the end of 10 years from the commercial operation date. Revenues from the project will be escrowed, with a pre-defined waterfall mechanism.

Be it the spick and span stations, the unmatched shopping experience or the impeccable baggage handling systems, this express line will have it all. October 2010 will not only bring the activity-packed Commonwealth games, but will also showcase the high-speed metro to the public. This Mass Rapid Transit System (MRTS) will further result in time saving for commuters while providing a green mode of transport, and will definitely revolutionize the way Delhi-ites commute.