The Union Ministry of Housing and Urban Affairs (MoHUA) of India has reportedly reduced its estimate for Chennai Metro phase two by Rs70bn ($976.6m).

Citing government sources, The Hindu reported that the MoHUA modified the cost to Rs62bn ($865m). Its previous estimate sat at Rs69.18bn ($965m).

The ministry came to the decision as it deemed the original to be very high.

Chennai Metro Rail Limited (CMRL) has been in talks with MoHUA to reduce the estimate over the past year.

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An unnamed source said: “It was an extremely challenging and tough process, but we managed to do it. It was very difficult as Bhopal Metro Rail was set as the benchmark for calculating cost per kilometre for the project.

“It may not be right to compare Chennai with Bhopal, as the purchase price of raw material and labour will be different.”

After informing the state government about the revised cost, it will move to MoHUA for approval. Following this, CMRL will modify the detailed project report.

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CMRL has procured a Rs201.96bn ($2.8bn) loan from Japan International Cooperation Agency (JICA) for the project.

It is now considering acquiring loans from the Asian Development Bank and the Asian Infrastructure Investment Bank. These would be for different sections of the project.

Last month, CMRL selected three firms to provide consultancy work for parts of the second phase of the Chennai Metro project.

It awarded contracts to Japan’s Nippon Koei, Aarvee Associates and Balaji Rail Roads Systems. They will provide consulting work for an initial section of 52km.