CAG audit reveals BMRCL lost ₹103.77 crore on Nagasandra land lease
The Comptroller and Auditor General of India (CAG) has found that the Bengaluru Metro Rail Corporation Limited (BMRCL) missed out on potential revenue of ₹103.77 crore while leasing 14 acres of land for integrated property development near Nagasandra station. The audit, part of a performance review of the Namma Metro Phase 1 and Phase 2, said the corporation did not adequately protect its financial interests when fixing the development premium.
According to the CAG report, a consultant initially valued the development premium at ₹320 crore in March 2015. This estimate was later revised, and the minimum development premium was fixed at ₹240 crore. The land was eventually leased for ₹251.01 crore, along with an annual charge of ₹2.51 crore and a 5% escalation from December 2023.
The auditors noted that based on the prevailing guidance value and valuation criteria at the time, the property could have fetched up to ₹354.78 crore. The difference between this potential value and the leased amount works out to ₹103.77 crore, which the CAG has described as revenue foregone.
The Nagasandra case highlights a broader concern about BMRCL's ability to generate non-fare revenue through property development. For Phase 2, the financial viability plan had projected income of ₹21,282 crore from property development on 55 hectares of land between 2016-17 and 2041-42. However, the audit found that as of March 2023, this land had not been acquired.
In addition, BMRCL developed 2.46 lakh square feet of built-up space at metro stations for commercial purposes, but only 0.23 lakh square feet was being used for commercial activity. The remaining 2.23 lakh square feet lay vacant for years, leading to an estimated loss of ₹38.53 crore in potential lease revenue between 2019 and 2022.
The CAG also observed that BMRCL did not have an Asset Management Policy to guide the monetisation of vacant spaces. The corporation has since floated tenders for retail space at 220 locations across 56 metro stations, expecting revenue of ₹25 crore, and has prepared an Asset Management Policy for approval.
These shortcomings matter given the scale of investment in the metro project. As of March 2023, about ₹40,000 crore had been invested in Phase 1 and Phase 2 by BMRCL and the State and Union governments. The CAG noted that principles of Value Capture Financing were not deployed to generate revenue from the increase in land values caused by metro infrastructure.
BMRCL signed six memoranda of understanding worth ₹605 crore for innovative financing of metro stations and corridors. However, only ₹103 crore had been received from two companies by March 2023. The CAG said there was no approved policy to ensure such financing was secured in a transparent and competitive manner.
The audit also flagged that BMRCL has been incurring cash losses continuously from 2013-14 to 2021-22, with its revenue insufficient to meet external debt repayment obligations. As of March 2023, it depended on the Karnataka government to service project debt.
The CAG has recommended that BMRCL ensure timely availability of land for property development, strengthen its asset management, and adopt value-capture mechanisms so that Namma Metro can earn greater revenue from the economic value created by its infrastructure.