Mumbai: MMRDA looks to acquire RIL-led Versova-Ghatkopar Metro
In a significant development, the Mumbai Metropolitan Region Development Authority (MMRDA) is likely to take over the operations of the Reliance Infrastructure Limited (RIL)-led Mumbai Metro One Pvt Ltd (MMOPL), which runs the Versova-Andheri-Ghatkopar Metro-1 corridor. The authority is looking at appointing a consultant for “strategic acquisition” of Mumbai’s first Metro corridor.
In August 2020, HT had reported that MMOPL, which has been facing losses since its inception, has written to the Maharashtra government proposing transfer of its shareholding to MMRDA. According to the tender document accessed by HT, Reliance is ready to consider a fair offer from MMRDA for transferring its stakes.
The document states that the consultant will have to carry out a valuation exercise and also look at the commercial and legal aspects involved in acquisition. “In the event MMRDA decides to proceed with the transaction, (it) would require assistance in negotiation with RIL, as well as execution and delivery of the transaction documents.”
A senior official from MMRDA said, “Reliance has expressed its interest in selling its stakes and we are giving it a due consideration.”
While the MMRDA was earlier looking at appointing a consultant for undertaking a performance review of Metro-1, it had not stated that it was planning to take over Metro-1. MMRDA did not receive any response for the first tender.
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. RIL owns 69% stake in MMOPL, MMRDA owns 26% and Transdev (formerly Veolia Transport) owns 5%. According to MMRDA, the total cost of the project is ₹2,356 crore, which includes ₹650 crore granted by the authority as a viability gap funding (VGF), of which ₹471 crore was released by the government of India between 2009 and 2014.
The corridor has been operational since 2014, with a daily ridership of around 4.5 lakh, before it was shut owing to the pandemic.
MMRDA is executing a 337-km Metro network in the Mumbai Metropolitan Region. The state government has also formed the Maha Mumbai Metro Operation Corporation Limited (M3OCL) for the operation and maintenance of all upcoming metro corridors in Mumbai, Navi Mumbai and Thane.
In March 2019, HT had reported that MMOPL was in talks with lenders for a resolution plan for its mounting debt of ₹1,928 crore. MMRDA had then given a go-ahead for its proposal provided the authority’s equity does not get diluted. Anil Ambani led-RIL has been in the news for its mounting losses. Sources said that the pandemic-ensued lockdown wherein services were shut for seven months made it worse for the company.
The company’s plans to increase fares to meet its cost overruns have also been facing roadblocks. In 2019, the second fare fixation committee appointed by the Central government rejected MMOPL’s claims on increasing fares and asked the company to re-look at innovative non-fare revenue methods to sustain.