India’s first fully privately financed metro line has opened in the city of Gurgaon. Trains started operating along the 5.1-kilometre stretch of elevated track on 14 November.
[ihc-hide-content ihc_mb_type=”show” ihc_mb_who=”3″ ihc_mb_template=”2″ ]
The line, which has six stations, was built using a public-private partnership model. It was developed by Rapid MetroRail Gurgaon Limited (RMGL), a consortium made up of Infrastructure Leasing & Financial Services (IL&FS) and real estate developer DLF. IL&FS owns 74% of the equity with DLF holding the remaining 26%. German engineering group Siemens was given a turnkey contract to build the systems and rolling stock for the line. The project cost almost US$170 million and was completed in 30 months.
Delhi-based law firm Link Legal, which recently merged with Mumbai-based India Law Services to form Link Legal – India Law Services, was the main legal adviser on the project. It was initially engaged by IL&FS, and later moved on to advise RMGL. The legal work commenced in 2009 and is still taking place.
Among the key legal issues that Link Legal – India Law Services advised on were the finalization of the concession agreement with the government, the finalization of the shareholders’ agreement, corporate strategy regarding a possible extension of the project, and general issues that arose from metro-related laws and regulations.
Under the terms of the concession agreement, RMGL is to bear all costs relating to the development, operation and maintenance of the metro line. The concession period is 99 years and as consideration for the grant of concession, RMGL will pay the Haryana Urban Development Authority US$117 million in “connectivity charges” over a 35-year period as well as 5-10% of advertising and property development revenues.
Commenting on the precedents the project has set, Ajay Sawhney, a partner at Link Legal – India Law Services, said: “With the successful opening of this metro line, doors have been opened for similar small metro feeder systems for other cities.”
[/ihc-hide-content]
