The fare fixation committee (FFC) set up after a clash between the private operator of the Metro and its government partner over fare has allowed a price band of Rs 10 to Rs 110.
At present, the R-Infrapromoted Mumbai Metro One Private Ltd levies fares of Rs 10, 20, 30 and 40 for the 11.4-km Versova-Andheri-Ghatkoparroute.
The Metro operator is unlikely to increase the tariff so steeply that it becomes unaffordable for commuters and leads to loss of traffic and revenue, but a spokesperson said there will be “gradual fare increase“. The Metro carries 2.8 lakh passengers per day . The FFC has recommended a maximum fare of Rs 110 after relying on several factors, said a source in the company . The FFC has kept in mind several factors, includ ing the cost of the pro ect, the fact that public private partnership (PPP) projects have high input cost compared o government-funded pro ects, etc, while deciding on the are,“ said a source.
The FFC, the first for a pub ic-private partnership metro n the country, came into existence on April 7, 2015, with re ired Justice E Padmanabhan as chairman, former state chief secretary Jayant Kumar Banthia and former law secre ary Dr T K Vishwanathan, as per a Union urban development ministry notification.The Supreme Court had asked he FFC to submit its recommendation by July 10.
“(MMOPL)... will work towards phased implementa tion of the FFC recommendations, with gradual fare increases together with the mitigating impact of potential real estate development and subsidy from the state government, and keeping in mind at all times the overall interest of our valued commuters,“ the spokesperson said, adding they received the report on July 8.
The FFC had sought opinions of experts before finaliz ing the fare. One of them told TOI, “The principle of fare fixation is affordability and sustainability . This is a PPP project, not a government venture.“
Loans for PPP are without sovereign guarantee, difficult to obtain and costly , he said. A part of the revenue earning goes to service the debt. Also, the PPP operator has to bear additional cost by factoring in foreign exchange fluctuations that make the loans more costly. Also, government projects get several kinds of concession like waiver of customs duty and taxes, which a PPP operator does not, making the cost of capital expensive.
For example, the Delhi Metro Rail Corporation (DMRC) has secured loan at a low interest of 1.5%. On the other hand, MMOPL pays an interest of 13%.
Another factor to be taken into account is that the revenue earned should not only be able to recover the operating cost but ensure that the operator is able to properly service the project.
The expert suggested the fare can be brought down provided the metro operator is able to increase its non-fare revenue. Also, the state can chip in by way of subsidy to ensure that the fares are affordable.
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