Reliance Infra-led Mumbai Metro One to seek Metro Operational Subsidy to keep fares low

Fare fixation panel experts suggest that subsidy be granted by the Maharashtra Government

Mumbai: Reliance Infrastructure-led Mumbai Metro One on Monday said it will seek metro operational subsidy from the state government to keep the fares lower, even as the Fare Fixation Committee has recommended its revision in the range of ₹10 to ₹110 for the over 11-km-long corridor.

Meanwhile, Mumbai Metro One (MMOPL), which is operating the network, has decided to continue the current fare range of ₹10 to ₹40 till October 31, after which it will review the fare structure and gradually increase the ticket costs depending on the government response.

“The recommendations by the Fare Fixation Committee (FFC) havetaken into consideration the cost to operate the metro line, business viability and the value propositions that metro brings in to its commuters.

Cash losses

“While at the business level, we continue to make significant cash losses, considering the interest of commuters, it is decided to maintain the existing fare for the time being while we engage with the government and other authorities to progress on leads given by the FFC,” MMOPL chief executive Abhay Mishra said.

Reliance Infrastructure, in a statement, also said that experts appointed by the FFC has also suggested that MMOPL should be granted metro operational subsidy by the government to keep the fare affordable and should fully monetise the potential of real estate available at metro properties, to ensure business viability.

The FFC on July 8 submitted its report recommending the revised fare after analysing all aspects, including the cost to operate the line and alternate modes of transport, sustainability and affordability.

It had recommended retaining the minimum fare at ₹10 and increasing the maximum fare to ₹110.

The committee, while fixing the fares had said, “MMOPL is not strictly comparable with other metros in the country, which have the distinguished advantage of concessional interest and lower power tariff, whereas Mumbai Metro is paying commercial rate of interest and a very high electricity cost.”

“It is a common practise across the globe to provide operational subsidy to transportation services which leads to business viability and fare affordability for a larger section of commuters,” Mishra added.

Other View

Reliance Infrastructure (RInfra) wants state government to pay Rs.100 crore annually or Rs.1,000 crore as one-time payment so that Metro fares aren’t hiked further. However, the Mumbai Metropolitan Region Development Authority (MMRDA) is already bearing the security cost for Metro, which is Rs.22 crore annually. Also, the government has paid Viability Gap Funding (VGF) of Rs.650 crore to make the project feasible, besides giving car depot plot worth at least Rs.700 crore.

“The government has already paid VGF to make the project feasible on the premise that fare of a maximum of Rs13 is charged. Now they want us to pay more but not lower the fares,” said a state official.

VGF is a one-time grant provided to make projects economically and financially viable and reduce the gestation period.

“Once the project is operational, again asking for funds from the government is equivalent to asking for more VGF. What’s the point of bidding for the project on the basis of VGF?” questioned an MMRDA official.

Besides the Rs650 crore the government has provided, it has contributed in the form of a prime plot in Andheri West at Four Bungalows for the car depot. The plot is worth at least Rs700 crore. In all, the government has contributed a minimum of Rs1,350 crore, apart from the ongoing cost.

Every year, the MMRDA is bearing a cost of Rs22.05 crore to foot the security bill. Maharashtra Security Force is deputed at all stations, along with the sniffer dog squad, on the Versova-Andheri-Ghatkopar corridor.

“The cost incurred to resurface the road below and repair the drainage-sewerage lines that had got damaged due to Metro construction has not even been included. Even this cost should be accounted for,” added the official.