Gurgaon Rapid Metro turns out to be a Flop

गुड़गाम Gurgaon (GGN) The privately-run 5.1-km Gurgaon rapid Metro rail project is recording a low ridership of only about 37,500 a day, compared with the initial projection of 90,000-200,000.

A fare hike is also likely next month from the current introductory fare of Rs 12 to up to Rs 23.

The Metro line was built at a cost of Rs 1,100 crore (Rs 11 billion).

Infrastructure Leasing & Financial Services, which owns the project, is considering a fare increase next month.

“Under the model concession agreement, we have the right to set the base fare, after our system becomes fully operational. With the opening of the sixth station in April this year, we are considering a fare rise early August,” said Sanjiv Rai, managing director of Rapid MetroRail Gurgaon Ltd (RMGL), the special purpose vehicle for the project.

After the expected rise in the base fare, all further increases will have to be cleared by a fare fixation committee, as is the case with the Delhi Metro.

RMGL says currently, the project is running on operational losses and expenses are being funded by it, through equity.

The company estimates it spends about Rs 3 crore (Rs 30 million) a month on the service, exclusive of the interest liability of Rs 8.24 crore (Rs 82.4 million) a month on debt of Rs  761 crore.

Earnings from fares stand at about Rs 1.35 crore (Rs 13.5 million) a month.

About 30-40 per cent of the overall revenue is accounted for by advertising and station branding.

Sources indicated the company made at least Rs 3 crore a year through station branding alone.

It, however, refused to share specific figures from the non-fare box collection.

For the Delhi Airport Express Line metro, too, the actual ridership had fallen short of the estimate in a detailed project report.

The higher estimated traffic from Delhi Metro Rail and the slow pace of other commercial projects on which the ridership projection was based were reasons why the Gurgaon metro ridership fell short of the estimate.

“We had expected corporate offices in Gurgaon to withdraw cab services and promote the metro, which is economically viable. But there has been some resistance in this regard, with companies fearing attrition if cab services are withdrawn,” Rai said.