Mumbai Monorail to chug, but at a higher cost

The agreement reached between Larsen & Toubro-Scomi Engineering (LTSE) consortium and Mumbai Metropolitan Region Development Authority (MMRDA) on Mumbai Monorail project has come at a cost.

MMRDA has agreed to pay a higher per-trip cost to LTSE to run the services from October and negotiations are on for the final figure, according to sources.

For a few years now, LTSE has been arguing that the per trip rate of Rs 3,131 is economically unviable to continue with operations & maintenance (O&M) of the monorail system. Earlier this year, it submitted a proposal to continue with its services by charging Rs 18,000 per trip (entire 19.5-km). This LTSE price is more than the per-trip quotation submitted in the O&M bid by IL&FS Rail, which emerged as the lowest bidder in April 2018.

However, a final per-trip price is yet to be agreed upon between LTSE and MMRDA to re-rail Mumbai Monorail services.

An observer told DNA Money that MMRDA by agreeing to continue with LTSE at a higher per-trip price is only weakening its case in the court of arbitration. LTSE may get more ammo to argue that MMRDA agreeing to revise the price vindicates its stand.

"Our negotiations continue with IL&FS Rail and we have asked for a break up of their costs," said Sanjay Khandare, additional metropolitan commissioner. When asked if the bid would lapse if LTSE continues with O&M, he replied, "It can be extended if IL&FS agree for it with the rates quoted and renegotiated with us."

This calming down of situation between the warring parties happened last week when LTSE representatives met MMRDA commissioner R A Rajeev to sort out the differences that has put brakes on monorail services.

"Scomi Engineering's head of India operations flew down from Malaysia to decide on Mumbai Monorail's fate," said a source. In order to cut costs, over a year ago, the entire Malaysian team of Scomi Engineering was recalled, leaving behind only one representative in Mumbai and the rest of the team comprised O&M team managing day-to-day operations.

As per the contract, L&T is the lead partner in the consortium and undertook civil works, whereas Scomi Engineering had to bring in rolling stock.

During the meeting, it was decided that LTSE will first fix the system to make it fit for operations starting October. For a few months from October LTSE will also continue with the usual O&M of the system and eventually hand over the project to whichever company MMRDA finalises for O&M.

As reported on July 6 by DNA Money, had the contract been terminated by either of the warring parties, there was a possibility of Mumbai not getting balance five of the total 15 trains. Presently, there are ten monorail trains, of which three are unfit to be introduced into revenue (passenger) service.

"LTSE has agreed to refurbish the three unfit trains so that they can be put back into service apart from supplying the balance five trains," said Khandare.

The refurbishment of three unfit trains is expected to be done by December 2018 and the balance five trains are expected to be delivered between March to June 2019.

Despite the MMRDA having safety certifications in place for the entire 20-km Chembur-Wadala-Jacob Circle corridor, the services would first be restarted only for the first phase. This is to ensure adequate frequency of trains on the shorter and less popular of the two routes – Chembur-Wadala Depot stretching 8.9 km. If entire 20-km route is opened for operations from October, the train frequency will be every 22-25 minutes. Hence, second phase (between Wadala Depot-Jacob Circle) or the entire route operations can be expected to commence only sometime during mid-2019.

L&T declined to comment.

EXPENSIVE TRIP

• Earlier this year, it submitted a proposal to continue with its services by charging Rs 18,000 per trip for the entire 19.5-km stretch
   
• The LTSE price is more than the per-trip quotation submitted in the O&M bid by IL&FS Rail, which emerged as the lowest bidder in April 2018