Mumbai: Logjam continues over Metro 1 acquisition as Govt and Reliance disagree on line's valuation

The stalemate over acquisition of Versova-Andheri-Ghatkopar Mumbai Metro 1 continues with the government and Reliance Infrastructure unable to come on the same page over the line’s valuation.

The Mumbai Metro One Private Limited (MMOPL) is a special purpose vehicle formed to execute, operate and maintain the mass rapid transit project on Public Private Partnership (PPP) basis. In MMOPL, Reliance Infrastructure holds 74% equity and the balance 26% is held by the Mumbai Metropolitan Region Development Authority (MMRDA).

Within the State Government, the round of discussions to acquire the 114 km corridor has been going on since 2019.

Recently, Right to Information activist Anil Galgali had filed an application with MMRDA for an update on the acquisition. In a response, the development authority shared a communication from MMOPL wherein Anil Ambani-promoted Reliance Infrastructure “is prepared to consider a fair offer for its entire shareholding of 74%” and would want the government to “evaluate” the same.

As per the letter dated July 13, 2020 and sent by Reliance Infrastructure’s Executive Director and Chief Executive Officer Punit Garg, as on June 2020, their debt and equity in MMOPL stands at Rs2,969 crore, including return on equity of 12% per annum aggregating to Rs503 crore. This letter was sent to the then Urban Development and Public Works Minister Eknath Shinde, who headed MMRDA back then as well as now and is currently Maharashtra’s Chief Minister.

Additionally, in 2014-15, MMOPL had filed for an arbitration claim to the tune of Rs2,830 crore, including interest up to June 2020 for “various defaults by MMRDA under the Concession Agreement”. To counter it, MMRDA had filed counterclaims of Rs1,644 crore.

The deadlock on these claims and counter-claims continues, resulting in the acquisition of the Metro rail project being on a slow track. Sources within MMRDA shared that the actual valuation of the project is where the acquisition is stuck at, with both parties unable to come on the same page. A questionnaire on the subject mailed to MMOPL did not elicit any response.

Back in Jan 2021, MMRDA had floated a request for proposal to appoint a consultant; however, not much headway has been made on the same.

On March 7, 2007, concession agreement between MMRDA and Reliance Infrastructure was inked to construct the corridor for an estimated cost of Rs 2,356 crore. Towards the end of construction, Reliance Infrastructure-led MMOPL claimed that the project’s cost escalated to Rs4,321 crore and it should be permitted to charge higher fare. The issue related to the fare was then contested in the Bombay High Court.

Operational since June 2014, the average daily ridership was 4.5 lakh prior to the Covid pandemic. Post pandemic, it took a hit and is now closing in on pre-pandemic levels. Currently, just over 4 lakh people use this corridor daily.

Published on: Tuesday, February 14, 2023, 10:49 PM IST