Maha seeks talks with MMRDA, Mumbai Metro One to retain current fares
State govt likely to weigh options of govt guarantee, foreign currency loan at lower rate, real estate exploitation
 "Maha seeks talks with MMRDA, Mumbai Metro One to retain current fares")
The Maharashtra government will soon convene a meeting with representatives of the Mumbai Metropolitan Region Development Authority (MMRDA) and the Reliance arm Mumbai Metro One Pvt Ltd (MMOPL) to discuss a Supreme Court order allowing the company to charge fares of Rs 10-110 on the 11.4-km Versova-Andheri-Ghatkopar route. The fare structure of Rs 10-110 was recommended in July by the Fare Fixation Committee (FFC) from the present Rs 10, 20, 30, 40.
Senior officials of the state government and MMRDA told Business Standard, “The meeting may take place before August 15 or the following week depending on the availability of the Chief Minister Devendra Fadnavis. Even though MMOPL has announced the existing fare structure of Rs 10, 20, 30, 40 will continue up to October end, some workable solutions need to be discussed apart from legal option.”
The official said the government may weigh options of providing a guarantee to MMOPL to raise debt at a concessional rate of one to two per cent from agencies, including Japan International Cooperation Agency (JICA). This may help MMOPL bring down annual outgo towards interest payment to Rs 20 crore from the present Rs 220 crore. Of the revised project of Rs 4,321 crore, MMOPL had raised a debt of Rs 2,100 crore from Syndicate Bank and other six banks at an average rate of 11.75 per cent. This apart, there is an equity plus Reliance ADAG sub debt of Rs 1,300 crore and $70 million foreign currency loan raised at 9.5 per cent. In addition to this, the Centre has provided Rs 650 crore under the viability gap funding.
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The official said, “The decision to provide guarantees to MMOPL on the lines of Delhi, Bengaluru and Chennai Metro projects for raising foreign currency loan at lower interest rate after assessing the relevant provisions. Similarly, the government may take a corporate guarantee from promoters. If the promoters decide to walk out of the project, the government will have every right to liquidate its guarantee.” The official however, noted that onus also lies on MMOPL to improve efficiency and check various costs in its operations. MMOPL declined to comment in this regard. However, an MMOPL spokesman reiterated that the company had communicated with the state government on July 29, seeking assistance.
Officials said MMOPL’s letter seeking a one time capital grant of Rs 1,000 crore, monthly subsidy of Rs 21.75 crore and commercial exploitation of real estate to maintain the present fare.
The company hopes to mobilise Rs 40 crore annually through the real estate development and advertisement. The company believes this will help it to maintain the present fare structure of Rs 10, 20, 30, 40.
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As far as filing yet another petition in the Bombay High Court or in the Supreme Court, the official said the decision in this regard will be taken after seeking opinion of the law and judiciary department.
The official admitted that as per the Metro Railways (Operations & Maintenance) Act 2002 there is no review mechanism prescribed after the FFC submits its recommendations. As per the section 37 of the same act, FFC’s recommendations shall be binding on the Metro railway administration.
Senior officials of the state government and MMRDA told Business Standard, “The meeting may take place before August 15 or the following week depending on the availability of the Chief Minister Devendra Fadnavis. Even though MMOPL has announced the existing fare structure of Rs 10, 20, 30, 40 will continue up to October end, some workable solutions need to be discussed apart from legal option.”
The official said the government may weigh options of providing a guarantee to MMOPL to raise debt at a concessional rate of one to two per cent from agencies, including Japan International Cooperation Agency (JICA). This may help MMOPL bring down annual outgo towards interest payment to Rs 20 crore from the present Rs 220 crore. Of the revised project of Rs 4,321 crore, MMOPL had raised a debt of Rs 2,100 crore from Syndicate Bank and other six banks at an average rate of 11.75 per cent. This apart, there is an equity plus Reliance ADAG sub debt of Rs 1,300 crore and $70 million foreign currency loan raised at 9.5 per cent. In addition to this, the Centre has provided Rs 650 crore under the viability gap funding.
ALSO READ: Mumbai Metro commuters may not get fare hike shock
The official said, “The decision to provide guarantees to MMOPL on the lines of Delhi, Bengaluru and Chennai Metro projects for raising foreign currency loan at lower interest rate after assessing the relevant provisions. Similarly, the government may take a corporate guarantee from promoters. If the promoters decide to walk out of the project, the government will have every right to liquidate its guarantee.” The official however, noted that onus also lies on MMOPL to improve efficiency and check various costs in its operations. MMOPL declined to comment in this regard. However, an MMOPL spokesman reiterated that the company had communicated with the state government on July 29, seeking assistance.
Officials said MMOPL’s letter seeking a one time capital grant of Rs 1,000 crore, monthly subsidy of Rs 21.75 crore and commercial exploitation of real estate to maintain the present fare.
The company hopes to mobilise Rs 40 crore annually through the real estate development and advertisement. The company believes this will help it to maintain the present fare structure of Rs 10, 20, 30, 40.
ALSO READ: RInfra's Mumbai Metro refinances Rs 1,650-cr debt
As far as filing yet another petition in the Bombay High Court or in the Supreme Court, the official said the decision in this regard will be taken after seeking opinion of the law and judiciary department.
The official admitted that as per the Metro Railways (Operations & Maintenance) Act 2002 there is no review mechanism prescribed after the FFC submits its recommendations. As per the section 37 of the same act, FFC’s recommendations shall be binding on the Metro railway administration.