Big setback for Reliance Metro as MMRDA tells CAG to take this step

The Mumbai Metropolitan Region Development Authority (MMRDA) has once again written to the Comptroller and Auditor General of India (CAG) to audit the accounts of Reliance Infra-led Mumbai Metro One Pvt Ltd (MMOPL) that built and runs Mumbai’s first Metro corridor. The MMRDA claims that MMOPL has objected to the CAG audit, saying that it will not serve any public interest. The MMRDA has however, disagrees with MMOPL’s claims.

The MMRDA and State government is caught in a tussle with the MMOPL over the actual construction cost of Metro-1 and the demand of fare increase of Metro-1 from Rs 10 to Rs 40 since 2015.

A communication sent by the MMRDA to CAG stated: “We had forwarded letter to MMOPL giving them 21 days to communicate their objections, if any, to the modalities and place of audit. Citing various reasons, MMOPL has once again registered its objections and disagreement to the proposal of conducting audit of MMOPL accounts”.

The MMRDA communication also said that MMRDA is not in agreement with MMOPL’s reasoning for not conducting the CAG audit. “In view of the above, you are requested to take further action as deemed fit to conduct CAG audit of MMOPL accounts,” the communique said.

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The MMOPL spokesperson said that the audit of Mumbai Metro is dealt under the provisions of the Concession Agreement. “Accordingly, it is being conducted by one of the renowned audit firms of the country. The dispute related to cost and fare fixation has already been entrusted to the arbitration tribunal and fare fixation committee. Therefore, the CAG audit will not serve any purpose as the disputes can be settled under the existing provisions of Concession Agreement,” the MMOPL spokesperson said. 

The dispute between MMRDA and MMOPL is also under arbitration since 2015. While MMOPL claimed that the cost escalated to Rs 4,321 crore due to several reasons, the MMRDA claims it to be Rs 2,356 crore.

To resolve issues, the state in April 2015 had said that a special audit of the company operating Mumbai Metro will be undertaken. MMOPL had earlier agreed but later withdrawn its consent, citing that the dispute is under the arbitration tribunal.

By Mehul R Thakkar, DNA India