Increasing input costs and no fare revisions in the past five years have put the Delhi Metro Rail Corporation (DMRC) in a fix. Writing to the Ministry of Urban Development (MoUD) “several times” in the last two years to red-flag the issue has been without success.
While the situation is still under control and Delhi Metro continues to make operational profits, Managing director (MD) Mangu Singh told Newsline that the decreasing gap between cost and revenue was bound to “pinch” DMRC sooner than later.
“We still have surplus. But that surplus is required to repay the loan we took from Japan. If a fare revision is done now (after a gap of five years), it will likely be steep. There should be a mechanism to revise the fare from time to time so that it doesn’t hurt the public much,” Singh said.
According to the MD, the last fare revision was in 2009, with the minimum fares fixed at Rs 8. Since then, he said, costs had gone up considerably. Expenditure on energy made up 27 per cent of DMRC’s operational costs in 2009 then. Today, it accounts for 42 per cent, he said. Similarly, unit cost of energy too has increased by over 100 per cent. “It used to cost Rs 3.25 per unit in 2009; it costs us Rs 6.89 now. Moreover, DMRC’s daily average ridership has increased from 8 lakh in 2009 and 11.5 lakh in 2010 to 25 lakhs in 2014,” Singh said.
“Energy is extremely expensive. Salaries of staff have increased; dearness allowance is mandatory every year. Moreover, the DMRC is involved in expansion projects. Fare revision is essential now. We have requested the MoUD several times in the past two years to set up a fare fixation committee, but it has not happened. We are hopeful that the new government will appoint a fare fixation committee soon,” Singh said.
Apart from operations, Singh said the DMRC generates part of its revenue from the business development models that have been successfully implemented at some of the Metro stations. “Around 20 to 30 per cent of our revenue comes from those ventures. Our business development team is constantly working on new property development projects. The advertisement business, however, has come down significantly in the past 3-4 years…,” he said.
According to provisions of Delhi Metro Rail (Operation & Maintenance) Act, 2002, the fares are supposed to fixed and revised by a regulatory authority (fare fixation committee) constituted by the Centre. This committee is a three-member body, chaired by an existing and/or a retired judge of the High Court. The committee also comprises representatives from the Central and state governments.
The Act also states that the regulatory authority, while fixing the revised fares, is supposed to take into account two basic factors — affordability by the public and long-term sustainability of the Metro system.
“The third fare fixation committee was headed by Justice (Retd) E Padmanabhan. Dr Noor Mohammad, member secretary, National Capital Region Promotion Board (NCRPB), and V V Bhatt, principal secretary (Finance), Delhi government, were members,” an official said.
The first committee was constituted in December 2003, a year after the opening of the first Metro section in December 2002. The revised fares were adopted from March 2004.