Anil Ambani’s Reliance Infrastructure has threatened to pull out from operating the Mumbai Metro. Citing financial inviability, the Mumbai Metro One Pvt Ltd (MMOPL) has told the Maharashtra government that it would be difficult to continue the operation in case it failed to generate adequate revenue.
In a letter to Maharashtra chief secretary, MMOPL has demanded 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 11.4 km Versova-Andheri-Ghatkopar (VAG) corridor. The operator has asked the government to decide on the demand by October 31 this year.
RailNews contacted Reliance Infrastructure for their version, but despite repeated attempts the company did not respond to our queries. The private concessionaire has told the Maharashtra government in clear terms that no hike in Metro fares could contain the financial losses and only financial assistance from the government could ensure smooth operation of the Metro services.
“Being a PPP project, the business sustainability on a standalone basis is of paramount importance as the project does not have any access to any type of concession/subvention from the government or any other source… In case the business fails to generate adequate revenue to meet its cost to operate the line, it would be extremely difficult for the operator to continue the operation,” said Abhay Kumar Mishra, the chief executive officer of MMOPL in his letter to Maharashtra chief secretary..
Moreover, the MMOPL has also sought its right to utilise the real estate for commercial purposes. The development assumes great significance as the Reliance Infrastructure had earlier given up the operation of Airport Express Metro in Delhi citing financial inviability. While the matter is still pending arbitration, the Delhi Metro was forced to take up the operation of the Airport Metro. However, sources said the Metro services in Mumbai will come to an abrupt halt if the operator decides to withdraw from operating the corridor. Ever since its inauguration on June 8 last year, the Mumbai Metro has been a hit among the commuters.
Nearly 5 lakh people use the Metro on a daily basis. Line 1 of the Mumbai Metro, also known as the Versova-Andheri-Ghatkopar corridor, is first part of the Mumbai’s Metro system. The 11.4km elevated corridor comprising 12 stations, connects Versova and Ghatkopar, the eastern and western suburbs of Mumbai. The corridor was built at the cost of Rs 4,321 crore. The corridor is operated by MMOPL, a joint venture owned by Reliance Infrastructure with Veolia Transport and Mumbai Metropolitan Region Development Authority (MMRDA) as stakeholders.
Citing unaffordability by commuters, the MMOPL has also refused to increase the existing fare slab of Rs 10 to Rs 40 despite the fare fixation committee recommending increase of the fares up to Rs 110. The concessionaire said that even the fare fixation committee has suggested the MMOPL to seek financial aid from the Maharashtra government in public interest.
“The four experts appointed by the fare fixation committee have recommended increase in the fare and opined that MMOPL must approach the Maharashtra government for grant or operational subsidy… but the MMOPL has decided to continue operating at the existing fare by providing a concession of nearly 60 per cent to commuters at least up to October 31, 2015. During this period we are hopeful that the government shall sympathetically consider our proposal in the larger public interest,” the letter read.
The private operator claimed that the fare fixation committee has categorically said that even if fare of Rs 10 is increased to Rs 110, MMOPL will be incurring losses on a day-to-day basis. It also cited various concessions extended to Delhi Metro in terms of low electricity rate and interest rate which enables maintenance of a low fare without compromising business sustainability. “The DMRC has access to various forms of concession viz. lower interest rate of 1 per cent and electricity rate of Rs 5.60 per unit.
On the contrary, the MMOPL is paying an interest rate of 11.75 per cent while it pays Rs 11 per unit for electricity,” it claimed.