State mulls buyback of  Metro-I from Reliance

To resolve the fare dispute which would raise the max fare to Rs 110 from the current fare of Rs 40

Mumbai : The State Government is mulling over the option of a buyback of the Versova-Andheri-Ghatkopar Metro corridor from Reliance Infrastructure Ltd, which is the principal stake owner in the project, to resolve the fare dispute. Mumbai’s first Metro corridor was implemented on public-private-partnership model, by creating Mumbai Metro One Pvt Ltd, a special purpose vehicle with Reliance Infra, Mumbai Metropolitan Region Development Authority and Veolia Transport SA with 69%, 26% and 5% stakes respectively.

MMOPL is slated to implement the revised fares from November 1. The new fare slab proposed would make the maximum fare Rs 110 from the current fare of Rs 40. A senior government official said, “Let them (MMOPL) go ahead with the implementation of the recommended fares if they wish to. There have been discussions that the government should buyback the project to solve this (issue). Since we are developing the entire (Metro) network and going to operate it, this corridor (Metro-I) alone would be operated by a different authority.” He quickly added, “The commuters’ count will decrease considerably, if they hike the fares.”

Another official added, “The two Dahisar-Andheri Metro corridors which will be coming up by 2019 will be intersecting with the VAG corridor at DN Nagar and at Western Express Highway. In that scenario, Reliance would stand to gain from the commuters that would use the corridor while the state government put in over Rs 35,000 crore for the overall Metro network in the city.”

The MMRDA has filed a writ petition against the recommendation of the fare fixation committee that recommended an increase in fare by Rs 10 for every subsequent station. Officials of MMRDA say that their contention is that MMOPL should stick to fare structure of Rs 9-11-13 decided in accordance with the concession agreement signed between MMOPL and the state government.

Earlier, Reliance Infrastructure-led MMOPL has requested the state government to provide operational and capital subsidy to keep the fares metro fares low and arrest significant cash losses. “The daily cash loss for MMOPL is nearly Rs 17 crore. While the profit and loss account loss is nearly Rs 300 crore annually,” said a source closely associated with the project. In August, MMOPL, in a letter to the Chief Secretary, has requested a minimum operational subsidy of Rs 21.75 crore per month besides the one-time capital grant of Rs 1,000 crore to continue operating the corridor. The development assumes greater significance as the Reliance Infrastructure had earlier given up the operation of Airport Express Metro in Delhi citing financial inviability.

At the same time, the buyback option too would not be an easy proposition for the state government. Another state government official explained, “There are a lot of question marks too in the process, but they can be resolved. Now, what should be the project cost taken into consideration while executing the plan – Rs 2,346 crore, the original cost or Rs 4,321 crore, the completion cost? Should this process be undertaken after the CAG audit is completed? Not that these issues cannot be resolved, but it’s a complicated process.”

Meanwhile, when contacted a MMOPL spokesperson said, “Based on the advisory of the Fare Fixation Committee, we have submitted a detailed proposal to Government of Maharashtra for an amicable solution to achieve the dual objective of a viable business and fare affordability. We are awaiting the response.”

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