The Mumbai Metro project has seen 70% cost escalation since the first line was signed in March, 2007 with the project cost now standing at around Rs 4,000 crore, Mumbai Metro One (MMOPL) chief executive officer Abhay Kumar Mishra said on Wednesday.
The MMOPL is an arm of Reliance Infrastructure.
Mumbai?s first metro line stretching 11.4 kilometres from Versova in the western suburbs to Ghatkopar in the east through Andheri, is being executed through public private participation (PPP) model. A concession agreement was signed between Mumbai Metropolitan Region Development Authority (MMRDA) and MMOPL in March 2007 for the execution of the project. Back then, the project cost was estimated at R2,356 crore.
The project which is more than two years behind schedule has missed several deadlines in the process. The cost escalation, Mishra said, was a factor of growing inflation which led to increase in input costs of raw materials, delays on account of right of way clearances, and shifting of utilities, etc. also added to the project cost.
?The extra money (on account of cost escalation) has been put in by Reliance,? Mishra said. The project has R2,000 crore of bank loans, R650 crore as viability gap funding from the government of Maharashtra, and the balance of around R1,350 crore has been put in by Reliance, he said.
The project is funded through a consortium of 10 banks. IDBI Bank is the lead bank, and the others include Canara Bank, Indian Bank, Karur Vyasya Bank, Oriental Bank of Commerce, Central Bank of India, Corporate Bank, State Bank of Hyderabad, Bank of Maharashtra and IIFC-UK. Interest cost of the project is at 13.25% currently, a sharp increase from 10% in 2007-2008, a senior official told FE.
As for the fixing of the initial fare, Mishra clarified that it will be fixed shortly by the board of MMOPL. Clearing the air over the fare fixing authority, he said that as the government of India has extended the Central Metro Act to Mumbai Metro Line 1 project, MMOPL has been made the project?s Metro Rail Administrator.
With this authority given, it will now be the board of MMOPL that will fix the initial fare, and not the state government alone.
However, he added that MMOPL?s board has representatives from the MMRDA as well, so the state government has a say in the first time fixation of fares. MMOPL board is understood to have 11 members of which eight are from Reliance and three are from the government of Maharashtra.
According to the Central Metro Act, decisions on subsequent fare revisions will then be taken by a fare fixation committee, which will be formed by the government of India with a High Court Judge as the chairman and additional secretary level officials from Central and state government as nominees.