Govt may buy first Metro line, keep fares low
The state government is mulling buying the Versova-Andheri-Ghatkopar Metro projectUpdated: Oct 09, 2015 01:28 IST
The state government is mulling buying the Versova-Andheri-Ghatkopar Metro project, as it looks at ways to end the constant tussle with the Mumbai Metro developer Reliance Infra-led Mumbai Metro One Pvt Ltd (MMOPL) over fare structure.
In July this year, a Central government-appointed fare fixation committee (FFC) allowed MMOPL to hike fares up to Rs110, but MMOPL stuck to its fare structure to not lose passengers. Commuters currently pay between Rs10 and Rs40 to use the service, but the MMOPL has asked the state for a Rs1,000-crore one-time subsidy or Rs22 crore every month to keep the fares low.
The state has said it finds buying the project more viable than providing a subsidy for the Rs2,356-crore project, especially when the government has already contributed Rs783 crore to it.
The buyout will not just bring the Versova-Andheri-Ghatkopar (VAG) project under government control, but will also lead to a rise in revenue when other planned metro lines are opened, government sources said.
“We will go for the buyout. We have taken up many metro lines, of which at least four will intersect the VAG metro line. It will lead to a significant increase in the number of commuters on the VAG line, which translates to an increase in revenue. Why should we grant subsidy and also let MMOPL to enjoy the benefits of more commuters?” said a bureaucrat, who did not wish to be named.
The government’s master metro project plan includes the recently approved Dahisar East-DN Nagar, and Dahisar East- Andheri East metro lines that will meet the VAG line. A Colaba-Bandra-Seepz (CBS) Metro 3 and Wadala-Thane-Kasarvadavali Metro 4 will also have connectivity to the VAG line.
The state has fixed the fares at Rs10 to Rs30 for all the approved lines.
The state government and promoter Reliance Infra have been odds about various issues related to the project.
Sources attached to MMOPL the state government will not be able to terminate the concession agreement or take over the project easily, considering the provisions of the agreement and the Central Metro Act. The state will have to devise a mechanism to fulfil legal obligations such as loan repayment, safety, security, passenger liability, sources said.
The MMOPL spokesperson said, “Based on the advisory of the FFC, we have submitted a detailed proposal to the state government for an amicable solution to achieve the dual objective of a viable business and fare affordability. We are awaiting their response.”
Another bureaucrat said an audit by the Comptroller and Auditor General (CAG) will clear doubts about the project cost, and a proper plan for the buyout can be prepared. The CAG is expected start audit in the next few months.