Reliance Infra tells high court that it needs to revise the fares as project is suffering big losses
Even as the tussle over the fares of the Mumbai Metro has run into legal trouble, Reliance Infrastructure told the Bombay High Court that it was incurring daily losses of Rs 1 crore to keep the services running. Reliance runs Mumbai Metro One Private Limited (MMOPL) in a public–private partnership with Mumbai Metropolitan Region Development Authority (MMRDA).
The high court has been hearing a petition filed by Congress leader Sanjay Nirupam and MMRDA, challenging the Fare Fixation Committee’s (FFC) decision to allow a hike of Rs 5 on single journeys along with a revision of seasonal pass rates.
The two sides
Representing Reliance Infra, senior counsel Janak Dwarkadas told Justice VM Kanade and Justice MS Sonak, “For the project, we put in Rs 4,000 crore, of which a large chunk was borrowed. We now have to start repaying that. Initially, the MMRDA had promised that they would put in Rs 1,500 crore, but in the end, only contributed Rs 600 crore.” It is worth noting that previously, R-Infra claimed its daily losses were in lakhs, not crores.
Meanwhile, Aspi Chinoy, who has been appearing for MMRDA told the bench that as per the agreement, it had been made clear that when operating the Metro at affordable rates and considering the operational costs, R-Infra and its subsidiary MMOPL might have to incur losses for eight years, and it could start making profits from the ninth year. The MMRDA has also claimed that the FFC was facilitating profiteering by allowing the proposed fare hike.
On November 27, the FFC cleared a fare hike between the price band of Rs 10 to Rs 110 (return fare). Presently, MMOPL levies fares of Rs 10 to Rs 40 for the Versova-Andheri-Ghatkopar route. MMOPL had proposed to increase the fare between Rs 5 to Rs 45 for single journeys and Rs 10 to Rs 35 on return journeys. MMOPL has justified the fare hike by claiming that it had already suffered a loss to the tune of Rs 300 crore.
Justice Kanade has kept the matter for a final hearing for August 22 and also extended the stay on the fare hike till then.