Metro costs escalate by 84%

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The construction costs of the Versova-Andheri-Ghatkopar elevated Metro being built by Reliance Infrastructure-led Mumbai Metro One Private Ltd (MMOPL) have risen up to `4,321 crore, which is around 84 per cent higher than the original estimate. The original cost of the 12-km long metro was `2,356 crore. As per the chief minister’s announcement on Friday, this project is going to miss its seventh deadline, which is in September this year.
A day after chief minister Prithviraj Chavan’s confirmation on Friday that Metro-1 was going to miss another deadline, an RTI query revealed that the construction cost of this project has shot up by 84 per cent and reached up to `4,321 crore. When the project was launched in 2008, MMOPL, a consortium that is constructing this project, had fixed the original cost of the elevated metro at `2,356 crore. In the backdrop of several missed deadlines, the escalated cost of the project has irked activists and experts.
The information furnished under the RTI on August 20 by public information officer of MMRDA Rama Patil to activist Anil Galgali states that the board members in a meeting held on May 2012 had approved a revised budget of this project that cost around `4,321 crore. But, as per the agreement signed between the government of Maharashtra and MMOPL, the MMRDA will not have to share the escalated cost and its cost sharing formula would be the same even after the escalation. “The MMRDA is not irked by the missed deadlines. As far as the cost sharing formula is concerned, the agreement clearly indicates that if there is a cost escalation in future, MMOPL will bear the entire amount. The delay will not cause any kind of financial loss to us,” said an official from the MMRDA, who monitors the project.
As per the cost sharing formula, the construction cost of `2,356 crore was to be funded according to a 70:30 debt equity ratio. However, the project suffered delays due to factors such as space crunch, utility shifting and getting approvals, environmental clearances, and addition of extra coaches, rupee depreciation, litigations, design changes, and more importantly delays in obtaining the right of way and permission from the Indian Railways etc. Hence, the cost escalation was inevitable.
According to a source, “RInfra has funded almost 60 per cent of the increased cost of `1,965 crore through a loan. The balance 40 per cent is being raised through debt.”
Mr Galgali, who had been keeping a close watch on the project right from the beginning, has dashed off a letter to the chief minister and requested him to put the onus of completing the project within the new deadline on MMOPL. He has also requested the CM not to fund the MMOPL any further, and instruct the MMRDA to ensure that the Metro becomes operational at the earliest. “MMOPL is keeping everyone in the dark. Even RInfra is not in a position to state the reason behind the cost escalation. This indicates MMOPL’s lack of planning, and unfortunately, the MMRDA has been very soft on MMOPL,” said Mr Galgali. He has also slammed MMOPL’s decision to let Reliance use its name on the coaches, the permission of which has not been sought from the MMRDA. When contacted, a spokesperson from MMOPL refused to comment. The MMRDA holds 26 per cent shares in MMOPL, while 69 per cent of the shares are in possession of RInfra that owns the consortium. The remaining five per cent of the shares are with a France-based company Veolia Transport.