Metro Moves Mumbai – Financial Express – 24-Dec-2014
December 27, 2014 - Uncategorized
Tarun Nagpal, a 32-year-old marketing professional, has taken a fancy for Mumbai’s first metro line. Nagpal commutes daily from Ghatkopar in the eastern suburbs of Mumbai to Andheri in the west in this mass rapid transport introduced to the city earlier in June. Nagpal, who used to take almost an hour to travel this 7 km distance, now covers it in 17 minutes flat!
“Metro has eased my commute a lot. I was weighing options to move to the western suburbs, but after the metro has come in, that is no longer required,” says Nagpal.
Nagpal is among those many commuters who travel between eastern and western parts of the city with ease now. The popularity of the metro has been increasing and is visible during peak office hours, when daily commuters say there is hardly any space to stand.
The passenger numbers also show a steady increase. The ridership on the 11.40 km long Versova-Andheri-Ghatkopar corridor crossed 50 million earlier this month, which it achieved in the first six months of operation. The daily ridership hovers at over 3 lakh passengers. Officials in the Mumbai Metro One Pvt. Ltd (MMOPL), the special purpose vehicle operating the metro, claim that it is the fastest ramp-up of ridership for any metro system in the world achieved in such a short span.
MMOPL was created to develop, implement and operate Mumbai’s first metro line, on a public-private partnership (PPP) model. It is a consortium formed by Reliance Infrastructure Limited, MMRDA (Mumbai Metropolitan Region Development Authority) and Veolia Transport SA of France with 69%, 26% and 5% stakes, respectively.
The concession period for the project awarded to MMOPL is 35 years. The corridor has 12 stations and reduce the travelling time of Mumbaikars on the route from 90 minutes to 21 minutes.
In July, company officials had said that the project is being able to capture its daily operating cost without the interest, which it hopes to capture by early 2015. Lalit Jalan, director (corporate strategy and affairs), Reliance Group, had said the operating cost of metro was R40-50 lakh per day.
At the end of the September 2014 quarter, MS Mehta, chief executive officer, Reliance Infrastructure, had said that the metro ridership was much in line with the expectations, however, it is still sometime away before the the project breaks even. Industry experts say that, while there are no set time durations within which a mass rapid transport system can achieve profitability, four to five years is the minimum that it would take, and then would depend on how much of the cost is subsidised by the government and the rate which funding has been obtained for the project.
Vishwas Udgirkar, partner, Deloitte Consulting, says, “For high cost projects like metro, the rate at which it has been financed holds key to breaking even. Also, constraints on fares affect revenue generation, as too much of an increase can bring down ridership, which will impact revenues”. He also said that as the ridership increases, the project will require more investments for purchase of additional rolling stock to increase the frequency of trains, which would also have a bearing on the duration before which it becomes profitable.
Globally, there are hardly any metro projects that are profitable. Hong Kong Mass Transit Railway (MTR), Tokyo and Osaka metro lines in Japan are among the few profitable metro projects in the world.