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Mumbai Metro to see one more war of fares soon

Both Mumbai Metropolitan Region Development Authority (MMRDA) and Reliance Infrastructure (RInfra), the joint operators of the Metro, are likely to make applications to the FFC about what the fares should be.

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You can expect yet another bout of arguments over the Metro fares, once the fare fixation committee (FFC) is formed. For, both Mumbai Metropolitan Region Development Authority (MMRDA) and Reliance Infrastructure (RInfra), the joint operators of the Metro, are likely to make applications to the FFC about what the fares should be.

An MMRDA official said, "The increase in project cost is not solely due to delay in giving right of way (RoW), that is, clearance to begin construction. There are many other factors like the extra construction they carried out, buying of more trains than planned, etc."

The project cost, which was initially Rs2,356 crore, now stands at Rs4,350 crore, as claimed by RInfra-led Mumbai Metro One Private Limited (MMOPL).

"We have presented our case in the Bombay high court about why the fares should not be increased. We would put forward the same points even in front of FFC," said metropolitan commissioner U P S Madan. MMRDA's contention is that rules mentioned in the concession agreement should be followed. Thus, the fare should be Rs9-11-13 and not Rs10-20-30-40, as already hiked by MMOPL.

FFC's formation is still under process. While the union urban development ministry having approved it, nod from the appointments committee of the cabinet (ACC) is pending.

Commenting on the matter, an MMOPL spokesperson said, "The initial project cost of Mumbai Metro One as estimated in 2007 was Rs2,356 crore based on the Concessioning Authority's promises that it would grant 100% unencumbered RoW within six months, that is, by September 2007. However, because of various challenges, the authority delayed it by seven years, and the last of RoW was given in February 2014."

"During this period, a number of factors like cost escalations, forex variation and design changes, led to a snowballing of the project cost to about Rs4,000 crore. During this period, all increases in the cost have been funded by MMOPL and its lenders. Therefore, the estimated cost for the purpose of fare fixation has been taken as about Rs4000 crore," he said.
 

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