Amid Cumulative Loss of Rs.1000 Crore in 3 years, MMOPL plans Fare Hike for Mumbai Metro

MUMBAI: After the Delhi Metro Rail Corporation (DMRC) hiked Metro fares for the second time in the year on October 10, the Mumbai Metro One Private Limited (MMOPL) feels that a similar hike is essential for the Mumbai Metro as well. Officials from the private metro operator lament their inability to hike fares, three years after operations began.

“A healthy fare structure is a basic need for sustainability of any Metro system. This has even been advocated by the Metro policy. We expect government bodies to work towards achieving this objective,” said an MMOPL spokesperson.

The fares for the 11.4-km Versova-Andheri-Ghatkopar Metro corridor have not been hiked since it began operations in June 2014 and the fare structure has continued to be Rs 10-20-30-40. However, in June this year they reduced discounts on their return journey tokens, store value pass and trip pass.

The operators cannot hike the fares owing to a High Court stay on the matter after the Mumbai Metropolitan Region Development Authority (MMRDA), the nodal agency for the metro, approached the court challenging a report by the Fare Fixation Committee (FFC) recommending a fare hike.

After a report by the FFC suggested a fare structure of Rs 10-110 for the corridor, MMOPL had announced it would increase the fares by Rs 5 from December 1, 2015, revising its structure to Rs 10, 20, 25, 35 and 45. However, it could not be implemented as the MMRDA approached the court and in an order on December 17, the revised fare was stayed.

In a hearing in December, the MMOPL told the court that it would continue to operate the metro services only as long as it could afford them. “I am bleeding right now and am willing to bleed a little more so that I don’t increase the fare right away. I may have to close down eventually. I have undertaken this project to see that quality service is made available and will continue to do so till I can afford it,” said the senior counsel representing MMOPL.

According to the spokesperson, MMOPL has made cumulative losses of more than Rs 1,000 crore in the last three years. “The government Metros get funding through international agencies based on sovereign guarantees from the government at 1 to 2 per cent interest rates. MMOPL has taken loan from Indian banks at interest rates of 10.75 per cent,” added the spokesperson.

Apart from the revenue generated from the fares, MMOPL also rakes in 10 per cent of non-fare revenue through advertising and renting out commercial spaces. However, they feel the non-fare revenue should ideally be 20 to 30 per cent.

The Mumbai Metro One was the first Metro project awarded in the country on a Public Private Partnership (PPP) basis. The Metro Rail Policy 2017 encourages more such partnerships in the upcoming Metro corridors in the country.

“Government will encourage Public Private Partnership (PPP) for implementation of the metro rail projects in the country. The state government, desirous of availing central financial assistance for Metro rail system in a city, should mandatorily explore the possibility of having a PPP arrangement,” reads the policy.

However, MMOPL rued that while the government encouraged the model, they are doing nothing to solve the current issues faced by it.

“Whether run by the government or by private companies, Metro operations should be sustainable. The same benefits offered to the government should be given to private parties as well. Why should the private sector be discriminated against? This will dissuade them from entering the fray,” he added.