Mumbai Metro fares can be hiked only after MMOPL Audit; says Devendra Fadnavis, Chief Minister of Maharashtra amid the controversy on Reliance Infra over revision of fare hike to burden citizens for its cost overruns
Mumbai: A hike in Metro fares will not be allowed until the special audit of the company operating the service doesn’t get completed, Maharashtra chief minister Devendra Fadnavis said on Monday. The state on Monday also requested the Centre to de-notify Mumbai Metro from the Central Metro Act, so it gets the power to fix the fares.
Fadnavis had, in April, announced a special audit of the company, Reliance Infra-led Mumbai Metro One Pvt Ltd (MMOPL), by the Controller and Auditor General (CAG) to examine the actual expenditure and operating cost, among others, as the government had reservations over the fare hike and escalated cost of the project. The CM on Monday said the government was tapping legal options to resolve the fare hike issue.
At a meeting called by Union urban development minister Venkaiah Naidu, Ranjit Patil, minister of state for urban development, sought ways to prevent the operator from charging higher fares. “Bringing Metro under the Central Metro Act, which lacks clarity on public-private-partnership projects, gave MMOPL the power to fix the fares. So we have asked the Centre to de-notify the project from the ambit of the Act for now and then add it again later, after making amendments that ensure the power to fix fares stays with the government,” said Patil.
“We told Naidu the abnormal fare hike has angered the commuters. He assured us that appropriate decision would be taken, after consulting the ministry of law and justice,” he said, adding the state has asked the Centre to reconstitute the fare fixation committee (FFC).
Patil was accompanied by MMRDA commissioner UPS Madan, city MPs Kirit Somaiya and Gopal Shetty, who said the report submitted by the fare fixation committee (FFC) was biased towards the operator.
Earlier, the project was being developed under the Tramways Act, which gave the state the power of fare fixation. “The FFC ignored the concession agreement between the state and Reliance Infra, and did not give us a proper hearing before increasing the Metro fare up to Rs.110,” Patil said.
The Ministry of Urban Development can either ask the same committee to review the recommendations or set up a new committee.
Sources in the chief minister’s officer said the MMOPL was not likely to initiate any hike in the near future. Meanwhile, about 50 Shiv Sena workers on Monday protested near Ghatkopar station against the fare hike.
Mumbai Metro wants to burden citizens for its cost overruns – FFC Dissent Note
Reliance Infrastructure (RInfra)-led Mumbai Metro One Private Limited (MMOPL) wants to burden you by not taking any risk or responsibility on itself due to cost overruns, says a dissent note sent with the Fare Fixation Committee (FFC) report.
The note attached in the FFC report, submitted to the MMOPL on July 8, states that the committee was “urged to disregard claims in relation to cost overruns from Rs2,356 crore to Rs4,321 crore”, which were made by the Mumbai Metropolitan Region Development Authority (MMRDA) to spare commuters from paying higher Metro fares.
Ex-chief secretary Jayant Kumar Banthia and FFC member, in his dissent note, recorded, “…MMOPL also referred to the serious delays attributable to the MMRDA, resulting into cost overrun, which were beyond their control and resulted in cost escalation. A summary of the delays attributable to MMRDA are provided in Exhibit 1. The issue of the disputed cost escalation is currently under arbitration between MMOPL and MMRDA.”
However, according to a Louis Berger report submitted to the MMRDA last September (on scrutiny on increase in project cost), out of the disputed amount of Rs1,965 crore, the hike in expenditure attributable to the MMRDA is just Rs43 crore. The balance Rs1,920 crore is because of the decisions taken by the MMOPL.
Some of the reasons behind cost overruns due to the MMOPL are additional rolling stock, signalling, electrical and mechanical works, escalators and lifts, track works, project development cost, and civil works.
The dissent note also mentions that the MMRDA had pointed out that as a fundamental principle of public-private partnership projects, “the project risks must be optimally divided between the concessionaire and the concessioning authority. However, in the present case, the MMOPL seems to be taking on no risk or responsibility on to itself but seemingly seeks to pass such costs on to the people of Mumbai.”
The FFC report has recommended fare of Rs.110 to commute on the entire 11.4-km line, or Rs10 for each station travelled. This fare structure was given the green signal by the Supreme Court on Friday.