Amid losses, RInfra writes to Maharashtra govt for selling Mumbai Metro-1 stakes
Reliance Infrastructure (RInfra)-led Mumbai Metro One Pvt Ltd (MMOPL) has written to the Maharashtra government, saying that it wants to sell the stakes it owns in the company. Metro-1 has been shut for five months owing to the pandemic and had been suffering losses prior to lockdown.
MMOPL is a special purpose vehicle (SPV) that was constituted to develop and run the 11.5 km Metro-1 on a public-private partnership model. RInfra owns 69% stake in MMOPL; the Mumbai Metropolitan Region Development Authority’s (MMRDA) owns 26%; and Transdev (formerly Veolia Transport) owns 5%.
Bhushan Gagrani, principal secretary, urban development confirmed that the department had received MMOPL’s letter. Reply to HT’s query, he said over text message, “Yes, we have just received [the letter]. [We have] not taken any view yet.”
At the time of going to print, RInfra and MMOPL had not replied to HT’s detailed questionnaire, sent via email.
A senior official told HT that the state has sought MMRDA’s views on the development. MMRDA is a nodal infrastructure authority implementing a 337-km Metro network in the Mumbai metropolitan region (MMR). Recently, MMRDA had invited bids to appoint an independent engineer to monitor the operations of Metro-1. “Since MMRDA is developing the entire Metro masterplan, it will be beneficial if Metro-1 is also under the same authority to provide an integrated and seamless network in MMR,” said the official.
The state has also formed the Maha Mumbai Metro Operation Corporation Limited (MMMOCL) to operate and maintain all Metro lines.
In March 2019, HT had reported that MMOPL was in talks with lenders to tackle its mounting debt of Rs 1,928 crore. MMRDA had then given a go-ahead to MMOPL, provided the authority’s equity was not diluted. Faced with losses since Metro-1 became operational in June 2014, MMOPL had planned to increase fares, but those plans faced roadblocks. In 2019, the second fare fixation committee rejected MMOPL’s proposal to increase fares and asked the company to re-look at innovative non-fare revenue methods.
MMOPL is also in the middle of an arbitration against MMRDA over cost escalation during the construction of Metro-1. While MMOPL claims it cost Rs 4,026 crore to build Metro-1, MMRDA claims the cost is Rs 2,356 crore as per the original contract.