Mumbai Metro on slow track, cost up 84% to Rs4,321 crore
- MONEYLIFE DIGITAL TEAM | 03/09/2013 03:23 PM
The cost of the delayed Versova—Andheri—Ghatkopar Metro project rose 84% to Rs4,321 crore. Although the Reliance Infrastructure-led Mumbai Metro One is going to miss its seventh deadline this September, the company is seeking to hike the fare to substantiate increased project cost
Repeated delays and rising cost of raw material has caused construction cost of the Mumbai Metro project to shoot up by 84%. It is now going to cost Rs4,321 crore, up from its original
cost of Rs2,356 crore. The project was scheduled for completion in March 2012, but remains "work in progress," according to Maharashtra chief minister Prithviraj Chauhan. The 12km long Versova- Andheri-Ghatkopar metro project is going to miss its seventh deadline, which was on September 2013, and is now scheduled to be completed early next year.
Right to Information (RTI) Activist Anil Galgali, who is closely following the progress of the Mumbai Metropolitan Region Development Authority (MMRDA) and state government projects, filed an RTI application seeking information on cost escalation and other issues. The response to his RTI query reveals many facts.
The Public Information Officer (PIO) of MMRDA, in his reply stated, "In meeting held on May 2012, Board members had approved a revised budget of Metro project cost around
Rs4,321 crore. The MMRDA will not share the additional cost. MMRDA will only consider original cost of Rs2,356 for project and its cost sharing formula would be the same in 70:30 ratio as per the agreement signed between government of Maharashtra and Mumbai Metro One Pvt Ltd (MMOPL)."
As per the agreement, the state government's share in the project was Rs1,194 crore while the rest Rs512 was to be paid by MMOPL. MMOPL is a special purpose vehicle (SPV) set up for the project between MMRDA, Reliance Energy Ltd (now Reliance Infra), and Veolia Transport of France. Reliance Infra holds 69% (Rs354 crore) in the SPV, while MMRDA holds 26% (Rs133 crore) and Veolia the remaining 5% (Rs25 crore) stake in MMOPL. The viability cost funding in the original project was Rs650 crore. While the union government was expected to pay Rs471 crore, the MMRDA was to bear Rs179 crore out of this viability cost funding. In short, as per the original project cost, MMRDA's was expected to pick-up a tab of Rs312 crore for the metro.
Although, the MMRDA has approved revised budget for the project, it had not specified about sharing the additional cost in the MMOPL, the SPV for the project. So this brings forth
an important question as to who will then bear the additional burden?
Galgali says, "It is full responsibility of MMOPL to complete project within the deadline. The deadline is extended for seven times and the government should not sanction a single paisa increase to MMOPL and instruct MMRDA to get the metro ready at the earliest".
"MMOPL is keeping everyone in the dark. Even Reliance Infra is not in a position to state the reason behind the cost escalation. This indicates MMOPL's lack of planning and unfortunately the MMRDA has been very soft on MMOPL," Galgali alleged.
He also slammed MMOPL's decision to let Reliance Infra use its name on the coaches for the metro. On this issue, MMRDA in its reply to the RTI application confirmed that the name put up by Reliance Infra on coaches is permitted neither by the Authority nor by the state government.
Reliance Infrastructure-led MMOPL has failed to complete this project before deadlines due to many factors such as changes in designs, rupee depreciation, space crunch, utility shifting and getting approvals, litigations, addition of extra coaches and
delay in receiving permission from Indian Railways.
MMOPL has approached the state government as well as the MMRDA seeking revision in ticketfares due to an increase in construction cost and purchasing extra rakes with an expectation of high ridership. The present fares are: Rs6 up to first 3km, Rs8 between 3km to 8km and Rs10 for more than 8km. The demand by MMOPL is to increase the fares up to Rs35. However for time being, this issue will not touched by the state government.
The first phase of Mumbai Metro rail project was inaugurated by Prime Minister Manmohan Singh in June 2006. Mumbai Metro is the India's first public private partnership metro project in which all the three phases of construction, operation and maintenance have been given to a private players.
Repeated delays and rising cost of raw material has caused construction cost of the Mumbai Metro project to shoot up by 84%. It is now going to cost Rs4,321 crore, up from its original
cost of Rs2,356 crore. The project was scheduled for completion in March 2012, but remains "work in progress," according to Maharashtra chief minister Prithviraj Chauhan. The 12km long Versova- Andheri-Ghatkopar metro project is going to miss its seventh deadline, which was on September 2013, and is now scheduled to be completed early next year.Right to Information (RTI) Activist Anil Galgali, who is closely following the progress of the Mumbai Metropolitan Region Development Authority (MMRDA) and state government projects, filed an RTI application seeking information on cost escalation and other issues. The response to his RTI query reveals many facts.
The Public Information Officer (PIO) of MMRDA, in his reply stated, "In meeting held on May 2012, Board members had approved a revised budget of Metro project cost around
Rs4,321 crore. The MMRDA will not share the additional cost. MMRDA will only consider original cost of Rs2,356 for project and its cost sharing formula would be the same in 70:30 ratio as per the agreement signed between government of Maharashtra and Mumbai Metro One Pvt Ltd (MMOPL)."As per the agreement, the state government's share in the project was Rs1,194 crore while the rest Rs512 was to be paid by MMOPL. MMOPL is a special purpose vehicle (SPV) set up for the project between MMRDA, Reliance Energy Ltd (now Reliance Infra), and Veolia Transport of France. Reliance Infra holds 69% (Rs354 crore) in the SPV, while MMRDA holds 26% (Rs133 crore) and Veolia the remaining 5% (Rs25 crore) stake in MMOPL. The viability cost funding in the original project was Rs650 crore. While the union government was expected to pay Rs471 crore, the MMRDA was to bear Rs179 crore out of this viability cost funding. In short, as per the original project cost, MMRDA's was expected to pick-up a tab of Rs312 crore for the metro.
Although, the MMRDA has approved revised budget for the project, it had not specified about sharing the additional cost in the MMOPL, the SPV for the project. So this brings forth
an important question as to who will then bear the additional burden?Galgali says, "It is full responsibility of MMOPL to complete project within the deadline. The deadline is extended for seven times and the government should not sanction a single paisa increase to MMOPL and instruct MMRDA to get the metro ready at the earliest".
"MMOPL is keeping everyone in the dark. Even Reliance Infra is not in a position to state the reason behind the cost escalation. This indicates MMOPL's lack of planning and unfortunately the MMRDA has been very soft on MMOPL," Galgali alleged.
He also slammed MMOPL's decision to let Reliance Infra use its name on the coaches for the metro. On this issue, MMRDA in its reply to the RTI application confirmed that the name put up by Reliance Infra on coaches is permitted neither by the Authority nor by the state government.
Reliance Infrastructure-led MMOPL has failed to complete this project before deadlines due to many factors such as changes in designs, rupee depreciation, space crunch, utility shifting and getting approvals, litigations, addition of extra coaches and
delay in receiving permission from Indian Railways.MMOPL has approached the state government as well as the MMRDA seeking revision in ticketfares due to an increase in construction cost and purchasing extra rakes with an expectation of high ridership. The present fares are: Rs6 up to first 3km, Rs8 between 3km to 8km and Rs10 for more than 8km. The demand by MMOPL is to increase the fares up to Rs35. However for time being, this issue will not touched by the state government.
The first phase of Mumbai Metro rail project was inaugurated by Prime Minister Manmohan Singh in June 2006. Mumbai Metro is the India's first public private partnership metro project in which all the three phases of construction, operation and maintenance have been given to a private players.
