Reliance Infra says it won’t exit Mumbai Metro project; seeks amicable solution, open to CAG Audit

The Mumbai Metro, which runs along the Versova-Andheri-Ghatkopar route, is the country’s first public-private partnership Metro project in which all the three phases

M.S.Mehta, CEO, Reliance Infrastructure Ltd
M.S.Mehta, CEO, Reliance Infrastructure Ltd

Mumbai: Anil Ambani led Reliance Infrastructure Ltd (RInfra) on Wednesday said the company was open to a Comptroller and Auditor General (CAG) audit of the Mumbai Metro rail services. The state government, which is at loggerheads with RInfra-led Mumbai Metro One Private Limited (MMOPL) over fare hike for the Metro rail services, had earlier issued the MMOPL a notice for an audit of all their accounts. The state had also approached the Centre with the demand.

Speaking to the media, M S Mehta, CEO, Reliance Infrastructure, said, “We are open to discussions with the state government on the financials of the Mumbai Metro. We are also open for a CAG audit, if at all that is what the government wants.”

The Mumbai Metro, which runs along the Versova-Andheri-Ghatkopar route, is the country’s first public-private partnership Metro project in which all the three phases — construction, operation, and maintenance — have been given to a private player.

Blaming the Mumbai Metropolitan Region Development Authority (MMRDA) and the State Government for project overruns, the MMOPL is now claiming that the Mumbai Metro cost has risen from Rs 2,356 crore in 2007 to Rs 4,321 crore, an increase of a whopping 83 per cent.

The state, on the other hand, has cast aspersions on the basis and the extent of cost overrun claimed by the MMOPL. On Monday, Ranjeet Patil, Minister of State (Urban Development) had claimed, “The project overruns have not been factually determined. We do not accept them.” The state government has further argued that the MMOPL has not responded to their requests for substantiating the cost overrun claims.

At a time when the CAG is already conducting a limited audit pertaining to the utilisation of viability gap funds extended to the MMOPL, the state had on August 1 issued a show cause notice to the entity seeking a “full audit” of all accounts of the MMOPL.

On August 10, the state also discussed this demand with Union Urban Development Minister Venkaiah Naidu. Chief Minister Devendra Fadnavis has also declared that the state won’t permit any fare hike till the fresh audit is completed.

A government-appointed fare fixation committee (FFC) had last month suggested that the MMOPL may fix the fare slab from Rs 10 being the minimum fare and Rs 110 as the maximum. At present, the fares range from Rs 10-Rs 40. However, MMOPL has decided to continue the existing fares till October 31.

Alternatively, the MMOPL has approached the government for a grant of an operational subsidy of Rs 21.75 crore a month, besides a one-time grant of Rs 1000 crore and permission to monetise real estate and commercial potential of the properties under their control to “sustain the project operations and effectively service debt.” The state, however, has turned down this demand.

On Wednesday, Mehta also clarified that at present, the company is not looking to exit the project. “We would like to have an amicable solution for the efficient running of the project for the city,” he said.

Meanwhile, Reliance Infrastructure posted a year-on-year decline of 12.4 per cent in the consolidated a net profit for the quarter that ended on June 30, 2015 at Rs 401 crore due to a loss of Rs 50 crore incurred on Mumbai Metro and Rs 39 crore in its cement business.

The company’s total income, however, has surged by 6 per cent.