Maharashtra govt abandons Metro-1 buy-out plan, to resolve debt crisis
10 Jul 2024
The Maharashtra government has abandoned its decision to acquire Mumbai Metro One Private Ltd (MMOPL) and directed Mumbai Metropolitan Region Development Authority (MMRDA) to consider clearing the Rs1,700 crore debt owed by Mumbai Metro-1 to its lenders.
The first railway corridor in the city, Mumbai Metro-1 was executed through public-private partnership between MMRDA and Reliance Infrastructure Ltd.
The 11.4-km long rail corridor that runs between Andheri in the western suburb and Ghatkopar in the eastern suburb, connects the Western and Central suburban rail networks.
Metro-1 that started operations in June 2014, has received wider acceptance as a convenient link between the two suburban rail routes.
Mumbai Metro-1 is being operated by MMOPL, a special purpose vehicle promoted by Reliance Infrastructure Ltd.
Reliance Infrastructure holds 74 per cent equity in MMOPL and the remaining 26 per cent by MMRDA.
Mumbai Metro-1 has been incurring losses ever since its launch and has encountered several disputes.
The state government signed a debt settlement agreement with MMOPL in March 2024 in order ro avert corporate insolvency.
Under the agreement, MMOPL has committed to a make one-time payment of Rs1,700 crore against its entire outstanding debt to settle the dispute. MMOPL also made an upfront payment of 10 per cent (Rs171 crore) to the lenders.
Earlier, in March this year, the state cabinet approved a Rs4,000-crore buy-out of R-Infra’s majority stake in Metro-1 by MMRDA for Rs4,000 crore, after MMOPL made a request to the state government in 2020.
Mumbai Metro-1 ran into heavy losses, particularly due to the financial losses incurred during the Covid-19 pandemic. However, MMOPL has reportedly been regularly been paying interest of Rs225 crore to lenders,
While a buyout would have allowed MMOPL to exit the project, lack of funds with MMRDA, audit worries and legal complexities forced the government from abandoning the plan.
The state cabinet is reported to have directed MMRDA commissioner to convene a meeting with lenders to discuss the matter.