While revising the metro fare to the Rs10-Rs110 band, the fare fixation committee (FFC) considered factors such as high operation cost, high interest on loans, and commuters agreeing to a fare during a hearing.
However, it ignored the government’s contribution of Rs783 crore to the project and the concession agreement between Mumbai Metropolitan Region Development Authority (MMRDA) and Reliance Infra, shows the report accessed by HT.
The two factors were pointed out by former chief secretary of state Jayant Kumar Banthia, one of the members of the FCC, in a dissent note. “There were conditions precedents to bidding such as 1) pre-fixed fare and 2)
Viability Gap Funding appears to have been overlooked for reasons known best to them. In the view of this very basis of PPP model of this project has been compromised (sic)”, the note reads.
Viability Gap Funding (VGF) is given by the government to make an infrastructure project viable for the private partner.
The other two members of the panel are retired high court judge Padmanabhan, former law secretary TK Vishwanathan.
While supporting the fare hike, the committee report says Barring one or two, commuters are willing to pay higher fare as it deserves…Being a prime service, the commuters who belong to a special class among the common people have a level of affordability and are willing to pay (higher) fare, which is commensurate with efficiency of service, security, punctuality, time availability.”
The committee was helped by surveys by PwC, Welingkar Institute and IIM-A while revising the fare. In their surveys, IIM-A recommended average fare of Rs60 while PwC asked for 3.5 times of the current fares.
The committee also turned down the example of Delhi Metro rail Corporation (DMRC) fare, saying, “DMRC fare is not relevant, as their financing and scale of operations is entirely different.” It stressed on the point that the DMRC pays interest of 1%, while the Mumbai Metro got the loan at an interest rate of 11.75%.