Why are Mumbai’s big-ticket projects always controversial?

  • Shailesh Gaikwad, Hindustan Times
  • Updated: Aug 11, 2015 17:59 IST

The proposed hike in Mumbai metro fare, following recommendations by the Centre-appointed Fare Fixation Committee (FFC), has become a tricky issue for both the state and the Centre even as commuters continue to react angrily to the steep hike.

Reliance Infra-promoted Mumbai Metro One Private Limited (MMOPL) has made it clear it will have to increase the fares as the present structure is commercially unviable. If the FFC recommendations are implemented, the fares will jump from Rs 10-40 to a maximum of Rs 110.

The MMOPL has also asked the government to give it a grant of Rs 1,000 crore to ensure that the project is viable. This is in addition to Rs 650 crore viability gap funding (VGF, which is government’s contribution to make the project financially viable for private partner) given by the Centre, Rs 133 crore contributed by the state government in the form of equity as well as land in Mumbai given by the state to build the project.

While the MMOPL points out that the commute on Versova-Andheri-Ghatkopar metro line is faster and the fares lower than other airconditioned public transport options such as fleet taxis and BEST buses, the government officials insist that the contribution of Rs 783 crore by Centre and state as well as land worth crores should also be taken into consideration while deciding the fare.

Former Maharashtra chief secretary JK Banthia, who was the only member in the three-member FFC to oppose the steep hike, gave a dissent note questioning how a PPP project could be aiming at profit soon after beginning its operations. Wary of angry reactions from commuters, the state and Central governments have undertaken efforts to untangle the issue.

This, however, is a classic example of what can go wrong with an infrastructure project built under the much-talked about public-private sector participation (PPP) system. The problem is not with the system, but the way our politicians in power and bureaucrats clear these projects. It is done without putting legal safeguards in place, ensuring the interest of the people. Successive governments have also failed to make sure that projects are not delayed owing to issues such as land acquisition and environmental clearances.

Before the metro, the Bandra-Worli sea link project was in the news owing to enormous cost escalation and the government was forced to pay the additional amount. On the other hand, two projects that would have helped decongest Mumbai were delayed by several years.

A noteworthy case was the Mumbai Trans Harbour Link (MTHL) project under which a sea link was proposed between Sewree (Mumbai) and Nhava (Raigad) to link Mumbai with the mainland. A consortium bagged the contract by quoting a much lower price than other bidders only to express helplessness in building the project later, leading to a delay.

Something similar happened with Metro-2 project, which was to be built between Charkop-Bandra-Mankhurd. The project was awarded to a certain company but got stuck over the issue of land for a depot. Last year, the company and the nodal agency, Mumbai Metropolitan Region Development Authority (MMRDA), reached an informal agreement to end the contract. In the process, the project got delayed further and may even be scrapped now.

While the government and private companies keep playing the blame game, it is the people who suffer as the mass transport projects that could make their daily commute better and reduce congestion get delayed.

Banthia told Hindustan Times on Sunday that the government should learn a lesson from the Mumbai Metro fare row and all clearances and resources should be procured before appointing contractors, especially in PPP projects, to avoid hurdles.

That alone may not be enough. There needs to be accountability when it comes to infra projects. The officers responsible for flawed agreements and private companies guilty of delaying projects get away very easily. This too needs to stop.

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