CAG’s Mumbai Metro audit to cover only part of Versova-Ghatkopar project

audit mmrcMumbai: The Metro fare hike dispute is likely to drag on for some time as the Comptroller and Auditor General (CAG) is not conducting a full project audit, while MMRDA officials say that new fares can’t be determined without such an audit.

While chief minister Devendra Fadnavis asserted on Monday that the fare will not be allowed to be increased unless an audit is completed, the CAG has restricted the scope of its audit to the viability gap funding (VGF) part of the Versova-Andheri-Ghatkopar corridor.

The VGF funding is to the tune of Rs 650 crore as against the initial project cost of Rs 2,356 crore.

The R-Infra-promoted Mumbai Metro One Private Ltd (MMOPL) has claimed that project cost increased to Rs 4,321 crore due to delays caused by the absence of right of way and clearances and changes in design.

However, a senior MMRDA official said, “We have asked the central government and the CAG to cover the entire scope of the project in the audit but there has been no response. Auditing the VGF component of the project will not establish if the cost escalations cited by MMOPL are justified.” Metro fares will remain unchanged till October 31.

The central government too can’t review the fare on its own and will have to either appoint a new Fare Fixation Committee (FFC) or ask the existing one to review the fare. MMRDA sources said, “The most the Centre can do is ask the existing FFC to review the fare recommendation or appoint a new FFC. The Metro Act (2002) allows the central government to appoint the FFC from time to time. It also says that the FFC’s recommendations are binding on the operator.”

On August 7, the Supreme Court upheld the fare slab of Rs 10-110 recommended by the FFC. An MMRDA official said, “It will remain a complex issue. What if the operator is opposed to the setting up of a new FFC and what if the SC agrees with the operator’s contention?”

Rules guiding FFC on Metro fare not clear, says dissent note

A dissent note in the Fare Fixation Committee (FFC) report on Mumbai Metro fares has said that the Metro Railway (Operation and Maintenance) Act, 2002, which is applicable for Mumbai’s corridor, has not been “clearly spelt out”, especially for a public-private partnership (PPP) project like the Versova-Andheri-Ghatkopar line. And that’s why Mumbaikars are paying a fare of Rs40 instead of Rs13, it added.

“…the existing rules to guide the FFC to enable it to fix the fare… have not been clearly spelt out so far, specially for a PPP project. This has proved to be a major challenge and constraint for the FFC. It is suggested that this aspect be dealt (with) by Government of India, at the earliest, specially for PPP metro projects, since affordability and reasonability of fare structure will be the essence for the common public at large (sic),” noted former Maharashtra chief secretary Jayant Kumar Banthia, one of the three members of the FFC.

As per the note, adequate precautions should have been taken earlier to keep fare fixation and revision out of the purview of the Metro Railways Act, 2002. “The very applicability of the provisions of Fare Fixation in this case did not arise, since it was a PPP project, whose pre-bid parameters were already decided and frozen in terms of fare structure and service levels… This action, however, does not alter the BASIC and FUNDAMENTAL NATURE of the PARAMETERS, which were conditions precedent to the bidding process and inherent part of the bid document for the proposed execution of the Mumbai Metro Project. (sic).”

Stating that it cannot be assumed to have given a complete go-by to the basic and unalterable parameters, terms of this project, as per the Concession Agreement, Banthia termed Mumbai Metro a unique project where the Metro Railways Act has been superimposed on the existing Concession Agreement. Therefore, the need is to have harmonious interpretation of the Agreement with the Act, his note said.

For this purpose, the state Urban Development Department and Mumbai Metropolitan Region Development Authority had met minister of urban development Venkaiah Naidu on Monday in New Delhi, so that the Act can be amended for such a ‘unique project’.