Chavan ‘thinking aloud’: Should govt take over the Mumbai Metro?

The citys first Metro is 11.07 km long and will run from Versova to Ghatkopar via Andheri.

With the Maharashtra government and Anil Ambanis Reliance Infra-led Mumbai Metro One Pvt Ltd at loggerheads over the companys demand for a three-fold increase in fares to make up for cost escalation,Chief Minister Prithviraj Chavan on Friday said the state was exploring if it should take over the project.

First phase of Mumbai’s Metro rail service to begin in September

There are presently two options before us either we take over the project because of breach of contract,or we go for arbitration. However,at this time I am just thinking aloud. No decision has been taken, Chavan said during an interaction with journalists in Mumbai.

Reliance Infra wants three-fold hike in Mumbai Metro fare

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The citys first Metro is 11.07 km long and will run from Versova to Ghatkopar via Andheri. The Bhoomipujan for the project was done in June 2006,but work began only in February 2008. The construction cost has increased from the original estimated Rs 2,356 crore to Rs 4,291 crore in the last four and a half years,according to MMOPL.

The company cited factors like addition of extra coaches,depreciation of the rupee,changes in design,delays in obtaining right of way and permissions from Indian Railways for the cost escalation.

With the Metro attaining completion,the concessionaire had earlier this year made a request to increase the fare so that it is able to recover its increased investment in the project. As per the concession agreement,MMOPL will run the metro for 35 years and then hand it over to the state government.

The fares at 2003-04 level were pegged at Rs 6 for less than three km,Rs 8 for between three and eight km and Rs 10 for beyond eight km. The agreement provided for an 11 per cent increase in fares after every four years.

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MMOPL has,however,now demanded a fare of Rs 28-30 for travelling eight km and beyond. With elections in a year,the state government is sure it does not want to burden the commuter with such a steep fare hike. It has now sought the opinion of the Attorney General of India if the fare hike could be allowed under the contract.

Reliance Infra’s two other major infrastructure projects are also stuck.

The second Metro line Charkop-Bandra-Mankhurd is stuck as the state is unable to get regulatory clearances. And the Rs 4,200 crore Worli-Haji Ali sea link project has not progressed because the company claims the state has not fulfilled its promise of land for construction.

When contacted,Reliance Infra declined to comment on the chief minister’s statement.