Mumbai: CAG audit may further delay decision on Metro fares

  • Saurabh Katkurwar, Hindustan Times, Mumbai
  • Updated: Nov 14, 2014 19:58 IST

The fares for Mumbai’s first operational Metro line are unlikely to be finalised soon.

A legal battle had already left the issue unresolved. Now, a delay by the public accounts watchdog in carrying out an audit of the project is expected to create another hurdle in finalising the fares for the Versova-Andheri-Ghatkopar (VAG) Metro line.

The Union government-headed Fare Fixation Committee (FFC) is supposed to consider the Comptroller and Auditor General (CAG) report while fixing or revising the fare.

The urban planning body Mumbai Metropolitan Region Development Authority (MMRDA) had in July this year asked CAG to start its audit in order to get clarity about the financial and policy aspects of the project.

“After we found that CAG had not started the audit process, we wrote to the Centre a few weeks ago. The Centre then asked CAG to expedite the audit,” said MMRDA commissioner UPS Madan.

CAG has discretion over the timing of an audit for any project.

Mumbai Metro One Private Limited (MMOPL) is the developer and operator of the Metro line. An audit would also help MMRDA verify the developer’s claims of cost escalation.

MMOPL had claimed that the capital cost of the project had increased from the original estimate of Rs. 2,356 crore to Rs. 4,321 crore. However, MMRDA refused to accept the claims and sought a CAG audit.

Apart from CAG, MMRDA can also approach an independent arbitrator to verify MMOPL’s claim.

MMOPL and the state government have been engaged in a legal battle since June this year over who has the right to decide the fares for the VAG line.

In November last year, the Metro project was included under the Central Metro Act, giving MMOPL the right to decide the fares. Using the provisions of the Act, it notified the new fares (Rs. 10-Rs. 40), which was higher than the previous fares notified by the state government (Rs. 9-Rs. 13), calculated as per clauses in the concession agreement.

* At present, MMOPL is charging promotional fares - Rs. 10, Rs. 15 and Rs. 20 - which will continue till December 31

* On May 29, the developer for the Versova-Andheri-Ghatkopar line – MMOPL – notified new fares, ranging between Rs. 10 and Rs 40

* The state government had earlier fixed the fares at Rs 9-Rs 13

* MMRDA had challenged the new fares in court, but its plea was rejected. It later filed an appeal in the Bombay high court

* MMOPL then agreed to continue with promotional fare between Rs 10 and Rs 20 till July 31

* In the next hearing, the court asked the central government to form a Fare Fixation Committee as soon as possible to finalise the fares. The promotional fares were extended till December 31.

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