RTI activist claims RInfra had estimated it would make a loss on Mumbai Metro project till 2018

Jul 23, 2015, 22:59 IST | A Correspondent

RTI activist Anil Galgali has alleged that RInfra, which constructed the 11.04km Versova-Andheri-Ghatkopar (VAG) Metro line one had projected a loss till 2018 in its business plan at the bidding stage itself.

“Reliance Infrastructure, which was the successful bidder for the Mumbai Metro project, had acquired the project by projecting reduced expenses of about Rs 1048 crores to get this important Public Private Partnership (PPP) project from MMRDA. In the business plan submitted along with its bid, it had projected and provisioned for losses for running the metro for 8 years of operations. That the company is now working against its own planned projection and causing harassment to Mumbaikars for earning high profits can be understood from the fact.” Anil Galgali alleges.

Galgali, in an email to the media, further states that the dispute between the MMOPL and the MMRDA has resulted in causing inconvenience to the Mumbaikars due to a fare hike as well as a projected fare hike.

Galgali had filed an RTI query seeking information pertaining to the project from the MMRDA. In a reply the MMRDA Informed Galgali that, Reliance Infra and IICU - IL&FS had bid for the Mumbai Metro project under PPP method.

“The financial bid of Reliance was projected cost of Rs 2356 crores and sought a viability gap funding of Rs 1251 crores, whereas the IICU - IL&FS submitted it's bid by projecting a cost of Rs 3404 crores and seeking VGF of Rs 1296 crores due to which Reliance promoted Mumbai Metro One Private Limited secured the project. As per the agreement executed between Reliance and the MMRDA, the project was to be completed by 2010.” said Galgali.

He further said that the business plan submitted by the Reliance estimated that the company would require 8 years to break even in this project and hence had planned to sustain loss upto 2018.

“Instead of sticking to its business plan the Reliance, right from day one had started cribbing about the losses, which is still going on. The state government along with the Reliance Co had finalised the fare pattern on 3/9/2013 and had approved the fares for the Mumbai metro uptil year 2044-45 and had allowed for stage wise fare increases of 11% every 4 years, which was agreed upon by the Reliance as well,” he added.

He stated, “To secure the Mumbai metro bid, the Reliance agreed to all the terms and conditions of the project. It is also understood that such projects need a long gestation period, which was reflected in its business plan of operating in loss for 8 years. Has now reversed its stand and taking the MMRDA, the state government and the Mumbaikars for a ride.”

Galgali has written a letter to CM and has demanded that Reliance Infrastructure should be banned from taking part in any of the PPP projects in future. “Also the MMOPL is seeking an additional assistance from the government which is similar to the difference between the bid of Reliance Infrastructure and IICU - IL&FS, that of Rs 1048 crores exposes the Chinks in the armour of the Reliance that it had purposely under bid to just secure the project and now is resorting to arm twisting by holding the mumbaikars to ransom.” added Galgali.

What MMOPL has to say?

MMOPL spokesperson said, "FFC has considered all aspects of cost to operate the line including long-term sustainability of the project. In our final financial bids to MMRDA at Rs 650 Cr VGF we had not envisaged any cash loss even in the first year of operation."

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