Mumbai: Reliance-led consortium could exit metro project over subsidies

  • HT Correspondent, Hindustan Times, Mumbai
  • Updated: Aug 06, 2015 22:58 IST

The Reliance Infra-led Mumbai Metro One Pvt Ltd (MMOPL), which operates the Versova-Andheri-Ghatkopar metro line, has indicated that it may exit the metro project altogether if the Maharashtra government does not provide subsidies to offset its losses.

In a letter to the state government, MMOPL has sought a one-time grant of Rs 1,000 crore or a monthly subsidy of Rs 22 crore to meet operational expenses. “In case the business fails to generate adequate revenue to meet the cost of operating the line, it would be extremely difficult for [us] to continue the operation," Abhay Kumar Mishra, chief executive officer of MMOPL, wrote in the letter.

However, a state government official ruled out any possibility of a subsidy to MMOPL. “We have already challenged the fare notified by MMOPL in court as it is against the provisions of the concession agreement. No subsidy will be granted,” said the official, who did not wish to be named.

In case the state government does not grant the subsidy, MMOPL can increase its fare up to Rs 110, but even this may not be enough to tide over its losses as passengers may shift to other, cheaper modes of transport. At present, MMOPL charges Rs 10 to Rs 40 for a ride on the 11.4-km Versova-Andheri-Ghatkopar metro line. A fare fixation committee (FFC) appointed by the central government has allowed it to increase fares up to Rs 110 but MMOPL has not done so yet, saying the hike will be gradual. The FFC also suggested alternatives, such as subsidies and additional revenue streams from real estate and advertising, to keep fares low.

Refuting suggestions that MMOPL was thinking of pulling out of the project, a spokesperson said, “MMOPL’s letter to the state government has been misinterpreted by a section of the media. The fact is we have approached the government as per the advice of the fare fixation committee for a sustainable, long-term solution.”

A senior official said MMOPL would wait for a reply from the state government before deciding what to do next. “It is not appropriate to say at this juncture that we may exit the project. We are waiting for a response to our demands of subsidy and revenue enhancement, including real-estate exploration,” said the official.

Incidentally, Reliance Infra had pulled out of the Airport Metro project in Delhi in June 2013, after telling the Delhi Metro Rail Corporation it was financially unviable.

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