MMOPL feels cost escalation in metro project

Mumbai Metro One (MMOPL), which implements the Versova-Andher-Ghatkopar (VAG) metro line, feels that the cost of the project has risen to around Rs 3,893 crore from the earlier estimated Rs 2,356 crore because of inflation and higher material costs. MMOPL, which is led by Reliance Infrastructure, plans to recover the rise of around Rs 1,500 crore in project cost by increasing Metro fares. Going by the government agreement in 2005, Metro and monorail fares were to be 1.5 times the BEST bus fare of that year and the amounts were to increase 11 percent every fourth year. Some experts feel that if the calculation, based on current BEST rates, was taken into account, the fare would be almost equal to Rs 24. Some reports suggest that the government may set up an independent committee, led by a retired judge, to study the recommendation and suggest a way out. Ad rights and commercial exploitation of stations are some of the other ways to recover the money invested. The present contract of the RInfra is for 35 years with first five years for construction and remaining 30 years for recovery of the cost. However, as per the concession agreement between RInfra and MMRDA this recovery period can be extended by another 10 years if needed.