Metro 1 rife with irregularities, state gives up idea of taking over ops

The government is considering the option of making a one-time payment to clear bank loans and avoid corporate insolvency on the part of MMOPL

Mumbai: The state government will not take over Mumbai’s first metro line spanning the Versova-Andheri-Ghatkopar corridor. A decision to this effect was taken on Friday after a study conducted by a third party found numerous irregularities in Mumbai Metro One Pvt Ltd (MMOPL), the special purpose vehicle that owns and operates Metro Line 1. Instead, the government is considering the option of making a one-time payment to clear bank loans and avoid corporate insolvency on the part of MMOPL.

A Reliance Infrastructure spokesperson said the government’s latest decision would not impact Metro operations ) (HT PHOTO)

The Anil Ambani-owned Reliance Infrastructure holds 74% equity share in MMOPL, while the Mumbai Metropolitan Region Development Authority (MMRDA) holds the remaining 26%. The state government had earlier proposed to take over Metro Line 1 by paying ₹4,000 crore to MMOPL, as recommended by a panel headed by former chief secretary Johny Joseph. That proposal has now been shelved, confirmed sources in the government.

“The decision to withdraw the buyback proposal was taken after a due diligence study by a third party revealed numerous inconsistencies,” said a government official. The study found that arbitrations had not been declared as mandated under the Companies Act; licenses for operations and administration had expired; assets worth crores weren’t functioning efficiently and needed upgradation; monetary guarantees to financial institutions remained unpaid; and some borrowings had not been disclosed. There was also no clarity on repaying the viability gap fund worth ₹650 crore to the state government, said sources.

A Reliance Infrastructure spokesperson said the government’s latest decision would not impact Metro operations as 20 years were still remaining in the concession agreement.

“MMRDA is a valued partner of MMOPL and has been serving Mumbaikars for the past 10 years. We have carried over 970 million passengers and completed over one million trips. We will continue to serve Mumbaikars by maintaining a punctuality of 99.9%,” the spokesperson said.

Commuters have been raising another clutch of issues that MMOPL would need to tackle in due course. These include demand for more metro trains, six-coach rakes as opposed to the current four-coach rakes and widening of space at Andheri and Ghatkopar stations. Railway officials said that they had had several meetings with MMOPL in the past, asking them to improve the condition of the Ghatkopar station, where there is severe congestion and overcrowding during peak hours.