Thursday, Nov 27, 2014

Metro won: Bombay High Court okays R-Infra’s initial fares

The R-Infra management has said the project cost has risen by nearly 70% to Rs 4,000 crore from the original Rs 2,356 crore. The R-Infra management has said the project cost has risen by nearly 70% to Rs 4,000 crore from the original Rs 2,356 crore.
Mumbai | Posted: June 25, 2014 2:00 pm

In a respite for Reliance Infrastructure, the Bombay High Court on Tuesday dismissed a petition by the Mumbai Metropolitan Region Development Authority challenging the hike in fares for the recently commissioned Mumbai Metro.

The court allowed Reliance Infrastructure-led Mumbai Metro One Private Ltd (MMOPL) to charge initial fares of between R10 and R40 until an independent fare fixation committee takes a decision. MMOPL had notified the initial fares claiming an escalation in operating cost but MMRDA was insistent on an initial fare of between R9 and R13 based on the concession agreement signed between MMOPL and MMRDA in 2007 and took the matter to court.

Upholding R-Infra’s plea, the court also found the concession agreement in conflict with the Metro Act, but observed that the arbitration tribunal can decide on the legality and validity of the resolution passed by MMOPL on fixation of fares.

The HC also said that Reliance Infrastructure and MMRDA were free to approach the arbitration tribunal on the matter. The court directed the central government to quickly set up the fare fixation committee, which will not have a member from either Reliance Infrastructure or MMRDA.

MMOPL has been justifying the higher fares on the grounds that the operating cost heads for Mumbai Metro — electricity, salary, depreciation and interest — have shot up, necessitating a fresh look at the fares. The R-Infra management has said the project cost has risen by nearly 70% to R4,000 crore from the original R2,356 crore.

Given the escalation and also because the Mumbai Metro is being brought under the Metro Act from the Tramways Act, R-Infra said that it is duty-bound to fix the initial fare since it is the Metro Rail Administrator. The Metro Act gives the administrator, in this case MMOPL, the flexibility to fix the initial fare.

The 11.4-km metro running from Versova to Ghatkopar via Andheri has been constructed in the public-private partnership mode. While R-Infra and private firm Veolia Transport hold a 74% stake in MMOPL, the balance 26% is held by MMRDA.

The MMOPL board has 11 members — eight from Reliance Infrastructure and three from the Maharashtra government. According to the Central Metro Act, decisions on subsequent fare revisions will be taken by the fare fixation committee to be formed by the central government with a high court judge as the chairman and additional secretary-level officials from the central and state governments as nominees.

This committee, however, will not have any member from MMOPL. According to R-Infra officials, this committee’s recommendations will also overrule the terms of fare revisions as were mentioned in the original concession agreement between MMRDA and MMOPL.

FE Bureau

comments powered by Disqus
Featured ad: Discount Shopping