Reliance Metro Express Saga – Who will bear the Burden?

When Reliance Infrastructure, the operator of the Airport Metro Expressline stops running the 22.7 km high-speed line from July 1, a crucial issue that will have to be addressed will revolve around who will bear the debt of approximate Rs. 2,000 crore given by lenders to the project led by Axis bank.

The Airport line — the first Metro project in Delhi on Public Private Partnership model between DMRC and Reliance Infrastructure — was commissioned in February 2011.

It was built at a cost of Rs. 5,700 crore of which Reliance Infra paid Rs. 2,880 crore.

While Delhi Metro Rail Corporation (DMRC), which had done the civil work on the line, wants the Centre and Delhi government to share the debt, the former represented by the Union urban development ministry is reluctant to bear the burden.

According to sources in the urban development ministry, the problem in the airport line cannot be blamed on them. It was DMRC which had prepared the detailed project report (DPR) of the Airport Metro line and had estimated a ridership of 40,000.

However, once the line was commissioned, the actual ridership was in the range of 10,000 to 11,000.

“It’s clear that the DPR was flawed and it’s the DMRC which is responsible for this. So why should the Centre bear the debt?” said a source.

What next?

DMRC has said that in case Reliance walks out of the project on June 30, then they would run the Airport Metro line in public interest.

Also, the entire project property would automatically come to DMRC. Besides, DMRC officials have also indicated that they will absorb the entire staff of the DAMEPL on their payroll. “This will ensure that there are no hiccups in running the line,” said an official.

However, DMRC is yet to spell out how it intends to improve services on the line if it takes over.

“It’s still too early to take a call on this issue,” added the official.

Penalty for breach of contract

Both UD ministry and DMRC officials said who will pay the penalty and its quantum would be decided by the arbitration board, which is presently hearing the case. Train services on the 22.7 km long express link had to be suspended for more than six months last year due to major defects in the civil work.