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Maharashtra government will not buy out RInfra’s stake in Mumbai Metro One
State government takes U-turn four months after agreeing to let MMRDA buy RInfra’s 74% stake in the east-west metro line for almost ₹4,000 cr; officials attribute decision to politics and a lack of funds with MMRDA
In a setback for Anil Ambani-led Reliance Infrastructure (RInfra), the Maharashtra government has reversed its own decision tobuy out the private company’s stake in Mumbai Metro One. The decision comes just four months after the government had given a go ahead to the proposal, and ahead of the upcoming State Assembly election.
The Mumbai Metropolitan Region Development Authority (MMRDA) was to acquire RInfra’s stake for close to ₹4,000 crore (for an Enterprise Value of around ₹5,400 crore), after the special purpose vehicle, Mumbai Metro One Private Limited (MMOPL), had approached the then-Maha Vikas Aghadi (MVA) government in July 2020, seeking an exit. RInfra has a 74% stake in MMOPL, which owns the 11.4 km metro line on the Versova-Andheri-Ghatkopar route, and the balance is held by MMRDA.
Two people in the know confirmed to The Hindu that the proposal to acquire RInfra’s stake was reversed by the State government during the State Cabinet meeting held on Wednesday.
‘Lack of funds’
Given the snowballing political dialogue that surrounds any acquisition from a private player, especially a few months ahead of State polls to be held in October, the Mahayuti government has decided not to provide any opportunity to the Opposition alliance of the Congress, Shiv Sena (Uddhav Balasaheb Thackeray), and Nationalist Congress Party (Sharadchandra Pawar), a source said.
“One of the reasons assigned for backing out from the acquisition is lack of funds with the MMRDA,” another official said, requesting anonymity.
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The development authority already has loans worth ₹1,03,622 lakh crore sanctioned for various infrastructure projects in multiple stages of implementation. Of this, nearly ₹27,000 crore debt has been availed so far. In March, it had presented a deficit 2024-25 budget of ₹7,468.25 crore. In the same month, based on a report submitted by an independent committee chaired by former Chief Secretary Johny Joseph, the Maharashtra Cabinet had cleared the proposal to purchase RInfra’s 74% stake for nearly ₹4,000 crore.
“MMRDA is a valued partner of MMOPL. MMOPL has been serving the Mumbaikars for the past 10 years. During these 10 years, we have carried over 97 crore passengers, completed over 10 lakh trips, and each train will also complete one lakh kilometres. MMOPL has many firsts to its credit and we still have over 20 years left in our Concession Agreement,” said RInfra’s statement issued on Friday. “We will continue to serve Mumbaikars by maintaining a punctuality of 99.9%.”
‘Ridership rising’
The metro line was inaugurated just over a decade ago on June 8, 2014 and has been popular among Mumbaikars due to its crucial east-west connectivity in a metropolis that has historically had a north-south bias to its mass public transportation system.
“The independent committee report had factored in capital expenditure required to augment the carrying capacity, as the ridership has been on the rise and there also is a robust non-fare box revenue. Not more than ₹300 to 400 crore is needed to purchase additional rolling stock and better the metro line’s service frequency,” an official added.
Owing to the financial stress on MMOPL, the State Bank of India and the IDBI Bank had filed an insolvency petition in the National Company Law Tribunal (NCLT) in August and October respectively, which was disposed of this April in view of the one-time debt settlement offered.
The Supreme Court had ruled in favour of Delhi Metro Rail Corporation (DMRC) this April to not pay ₹7,687 crore to RInfra for the arbitral award that the infrastructure company’s subsidiary Delhi Airport Express Private Limited had won in 2017.
Delhi’s Airport Express and Mumbai Metro One were RInfra’s only two metro rails under a public-private partnership finance mode; the former was taken over by DMRC in July 2013.
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