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AfricaMoney | August 23, 2017

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Mauritius Light Rapid Transit to fast-track the progress of the island economy

Mauritius Light Rapid Transit to fast-track the progress of the island economy

The overall project evaluation demonstrates that the MLRT delivers a net positive economic return to society with an additional Rs 15.9 billion in road-user benefits. (Image: Aurecon Group)

The study on the introduction of the light rapid transit system, whose findings were recently made public, has shed a reassuring light on the progress of the Mauritius Light Rapid Transit (MLRT) Project.

The study was conducted in October 2013 and the report was submitted on Thursday, August 14, 2014, in the Parliament.

It may be noted that the MLRT is a priority transport infrastructure project that will deliver significant and much-needed travel improvements to the Mauritian population as well as substantial transport, economic, environmental and community benefits to the nation.

The overall project evaluation demonstrates that the MLRT delivers a net positive economic return to society with an additional Rs 15.9 billion in road-user benefits.

Besides, the study outlined that, over time, “it could be expected that the introduction of the MLRT would contribute to a reduction in road infrastructure investments due to the shift in passenger travel mode.”

The MLRT aims at enhancing travel between the island’s second largest town of Curepipe and its capital Port Louis to serve the fastest-growing areas in Mauritius, and the infrastructure boost provided by the rapid transit network is expected to accelerate the country’s economic development and prosperity.

Among other notable benefits, it will reduce traffic congestion, meet current and emerging transport needs of Mauritians and improve access to offices as well as service outlets for people living along the corridor, while providing a greater range of travel options to local commuters.

Indeed, a detailed study on the costs and profits of the MLRT stated that this project is likely, at a 90% probability, to generate some Rs 22.9 billion in revenue streams; impose operational costs of some Rs 818 million per year for the period 2018-2027; and Rs 839 million per year thereafter for the decade from 2028-2037.

As a basis for forecasting total commuters on the MLRT, a VISUM traffic model was used and the study predicts that approximately 50 million passengers per annum are likely to avail the facility in 2018, which would then grow to approximately 54 million passengers per annum by 2038.

Besides the fare box revenue has been estimated for the 19 stations and the MLRT fare structure has been modelled to be similar, on an average, to the fare of buses in 2012.

It is estimated that over a 20-year period of being in operation, the present value (PV) of fare box revenue would be approximately Rs 18.3 billion.

The Net Present Value (NPV) of the project ranges from Rs 8.8 billion to Rs 10.5 billion, hence the NPV of the project indicates a negative return.

In the estimation of cost of capital at 2.48%, it is suggested that if the government finances 20% of the capital of Rs 22.9 billion, its annual budgetary contribution will lower to Rs 392 million per year.

Finally, the study makes no provision for any compulsory acquisition of lands. Neither does it account for any increase in the cost of bus tickets which should normally lead to a higher cost of the light railway ticket and thus to a lesser budgetary responsibility for the state, as the project will be able to meet a larger proportion of its own costs if rail fares, and accordingly, revenue streams, increase.

The Singaporeans considered several socioeconomic aspects of the project as well. During the construction phase, a direct and indirect job creation of 7,000 is expected, and the project will contribute Rs 12.4 billion during this phase to the Gross Domestic Product (GDP) of the island economy.

Moreover, the report states that the light railway will reduce the number of vehicles on road as well as the number of accidents. It will also help the public to save precious time in commuting, which will be profitable economically for the island and will also accrue social benefits to the citizens.

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