RInfra abandoned airport line, so it is not entitled to recovery: DMRC MD

He says had RInfra not been there, the money it has put in would have been invested by someone else

Delhi Metro Rail Corporation suffered a setback when the Delhi High Court earlier this month upheld an arbitration award in favour of Reliance Infrastructure. The company, whose success has been the reason for the metro revolution in the country, added over 30 km to its network in the past four months even as it is seeing a fall in ridership because of increases in fares in May and October. In an interview with Megha Manchanda and Jyoti Mukul, Managing Director Mangu Singh talks about the next course of action. Edited excerpts

The recent Delhi High Court order has gone in favour of Reliance Infrastructure so do you see taking over the Airport Express caused problems for you?

It is unfortunate that there was a dispute and we had to fight in the court over this project, which was completed in a short period of four years, and that too jointly with a private player. Secondly, infrastructure projects, be it roads or power, come to a standstill and the public suffers if there is a dispute. Public money is not put to use. We did not allow this dispute to stop operations of that line. The services continued and the facility is being used by a large number of people. If we had allowed the system to stop, it wouldn’t have been possible to re-start the system because it is complex technically. The dispute is whether the money spent by it should be returned fully or not. The arbitrator has said the entire money put in by the company should be returned, along with interest.

Will the DMRC balance sheet be able to sustain the outgo of close to Rs 50 billion on account of the arbitration award?

I would not like to talk much about it but we will appeal in the higher Bench of the Delhi High Court, maybe this week itself. Had it (RInfra) not been there, the money it has put in would have been invested by someone else. It is a question of reimbursement of investment by them. For executing a line of 22 km, around Rs 70 billion is required. We will see how the money will come. Our point is that the company abandoned the project and, therefore, is not entitled to full recovery. On the other hand, it is supposed to compensate us for the loss.

Is the fall in the daily ridership of Delhi Metro by about 200,000-250,000 a matter of concern? 

Our operating ratio (revenue over cost) is 73 right now. If there had been no fare hike we would have crossed 100, which essentially means an operational loss.

How do you look at the two contrasting experiences which DMRC had — of increasing fares and fall in ridership on the main lines and cut in fares and increase in ridership on the Airport Express line? How can metro systems achieve a balance?

Right now, the airport line is running at an operational profit of Rs 180-200 million per year for the last two years. The fare revision has led to an increase in the overall operational profits of Delhi Metro. The two systems are different. The Airport Expressline, when it was developed, was done through public private partnerships (PPPs) and in order to give comfort to the PPP player, the concession agreement had an upper limit and the concessionaire could have started anywhere below.

Reliance Infrastructure was charging a lower fare when the line started, but when the operations on the Expressline resumed, the company raised it back to Rs 180 or so, which hit ridership. When we had to start running the metro after taking over, our purpose was to make sure that the system was put to use. We reduced the fare to the same level at which it was running the metro earlier. That is how the traffic came back and it is going up as we speak.

Was higher fare the only reason the metro operations became unviable for the earlier operator?

Its project was heavily dependent on property development since in 2006-07 the property market was booming, so it anticipated huge revenues from property development. Its projections were very high at that time, but when it came into action around 2010-11, the property market had crashed. Now, we have done substantial property development and that is why we are making profits.

After the inauguration of the first phase of the Pink and Magenta lines, where will your network extend to and how much will it be?

By the end of the year, our network, which would include Noida, Greater Noida, and Ghaziabad, would be over 350 km. On the Gurugram side, the Haryana government is not very keen on the extension of the airport line to the Dwarka Expressway. It appears they are keen on other sectors. DMRC had suggested extending the existing Dwarka Blueline metro to Gurugram. This would have given direct connectivity between Gurugram and West Delhi at not a very high cost.