BMRCL Lost ₹103.77 Crore on Nagasandra Land Lease, CAG Audit Finds

The Bengaluru Metro Rail Corporation Limited (BMRCL) lost potential revenue of ₹103.77 crore by fixing the minimum development premium at a lower level while leasing 14 acres of land near Nagasandra metro station, according to a performance audit by the Comptroller and Auditor General of India (CAG).

The CAG audit on the implementation of Phase 1 and Phase 2 of the Namma Metro rail project revealed that BMRCL failed to adequately safeguard its financial interests during the valuation process. A consultant had initially assessed the development premium for the Nagasandra property at ₹320 crore in March 2015. However, the estimate was subsequently revised down, and the minimum development premium was set at ₹240 crore. The land was ultimately leased for ₹251.01 crore, with an annual charge of ₹2.51 crore and a 5% escalation starting from December 2023.

According to the audit, the property's potential value could have reached ₹354.78 crore based on prevailing guidance values and applicable valuation criteria at the time, resulting in ₹103.77 crore in foregone revenue.

The findings were part of wider concerns regarding BMRCL’s property development and non-fare revenue generation. For Phase 2, projections anticipated ₹21,282 crore in income from property development on an additional 55 hectares between 2016-17 and 2041-42. However, the 55 hectares earmarked for development had not been acquired as of March 2023.

The CAG also found that while BMRCL developed 2.46 lakh square feet of built-up commercial space across metro stations, only 0.23 lakh square feet was in use. The remaining 2.23 lakh square feet remained unoccupied for years, leading to an estimated revenue loss of ₹38.53 crore between 2019 and 2022. The audit noted that BMRCL operated without an Asset Management Policy to monetize these vacant spaces, though it later floated tenders for retail space at 220 locations across 56 stations and prepared a policy for approval.

Additionally, the report highlighted that BMRCL and the State and Union governments had invested approximately ₹40,000 crore into Phase 1 and Phase 2 as of March 2023, but failed to deploy Value Capture Financing to monetize increased land values. Of six memoranda of understanding valued at ₹605 crore for innovative financing, only ₹103 crore had been received from two companies by March 2023.

The audit stated that BMRCL incurred continuous cash losses from 2013-14 to 2021-22 and relied on the Karnataka government to service its project debt as of March 2023. The CAG recommended timely land acquisition, improved asset management, and the implementation of value-capture tools.