Eight years on, state yet to arrive at valuation of Mumbai Metro 1

MMOPL claims to be losing R90 lakh a day. File pic

Amid the state's efforts to wrest complete control of the operations of the city's first Metro corridor between Ghatkopar and Versova and the operator's attempt to get rid of its holding citing massive losses, the matter is stuck in limbo over the project's valuation. While the line came up eight years ago, Mumbai got two more Metro lines-2A and 7-only a month ago.

Of the several Metro projects coming up in the Mumbai Metropolitan Region (MMR), the Versova-Andheri-Ghatkopar line is the only such mass-transit system to be executed through a Public-Private Partnership (PPP) model by roping in the Anil Ambani-promoted Reliance Infrastructure. The company wants to offload its stake claiming that it has been making losses of Rs 90 lakh a day, pre-COVID.

In the special purpose vehicle Mumbai Metro One Private Limited (MMOPL), 69 per cent equity is owned by Reliance Infrastructure, 26 per cent by Mumbai Metropolitan Region Development Authority (MMRDA) and 5 per cent by Transdev (formerly Veolia Transport).

The daily ridership on Metro 1 has dropped from 4.5 lakh to 2 lakh. File pic

In January 2021, the MMRDA had floated a request for proposal to appoint a consultant to advise them on the strategic acquisition. But with over a year gone by, the consultant is yet to submit its report.

Sources said the consultant's report is still in the making and arriving at a definite valuation of the 11.4-km corridor is what is delaying it. The consultant's preliminary report is inconclusive and silent on the valuation aspect, one of the prime purposes for which it has been appointed.

"The valuation of the entire project can be ascertained and finalised only after the arbitrators give their judgement," a senior bureaucrat shared. Even if the state government, with the help of a consultant's report, claims a certain valuation, the same will be disputed and disagreed with by Reliance Infrastructure, said sources. In that case, the entire process that is underway will turn out to be futile.

Feud over fare and more

On March 7, 2007, MMRDA and Reliance Infrastructure signed a concession agreement to construct Mumbai's first Metro line at an estimated Rs 2,356 crore.

Towards the end of construction, MMOPL claimed that the project's cost had escalated to Rs 4,321 crore and it should be permitted to charge higher fares.

The fare matter was then contested in the Bombay High Court. The dispute over the valuation continues to date.

Operational since June 2014, the average daily ridership on the corridor was 4.5 lakh, pre-COVID. Now, about 2 lakh people use it daily.

Citing the questionnaire being a detailed one, MMOPL refused to reply on the subject.

Mumbai Metro 1

Length: 11.4 km
MMRDA's initial valuation: Rs 2,356 crore
Reliance Infra's valuation: Rs 4,321 crore
Government stake: 26 per cent
Private shareholding: 74 per cent