Rapid Metro losing steam?

Over 60,000 commuters keep their fingers crossed as RMGL takes on HSVP over operations of the Gurugram metro project in the Punjab and Haryana High Court tomorrow

Sachin Sharma, 43, regularly commutes to his workplace at Cyber City in the Rapid Metro. He has been boarding the train at Sector 54 Chowk metro station and alighting at IndusInd Bank Cyber City as a daily routine for the past one year. But he is a worried man now with uncertainty looming large over the continuity of the network.

For a city with an abysmal record on public transport, the news of Rapid Metro network struggling financially has come as rude shock for the residents. Around 60,000 people commute daily in Rapid Metro, India’s first fully privately financed metro system that also acts as a feeder to the Delhi Metro Rail Corporation (DMRC) network, connecting at the Sikanderpur metro station on the Yellow Line.

On shaky ground

Not able to meet its targeted ridership of one lakh — for the first and second phases put together — the almost 12-km-long metro network has been on shaky ground financially since it began its commercial operations on November 14, 2013. The first signs of trouble appeared last year when Rapid MetroRail Gurgaon Limited (RMGL) accused the Haryana Shehri Vikas Pradhikaran (HSVP), formerly Haryana Urban Development Authority (HUDA), of material breaches and defaults on the concession contract and asked the Haryana government to fix them within 90 days.

In an agreement reached between the RMGL and HSVP (then HUDA) on December 9, 2009, the company was entitled to participate in property development and advertisement at project site to generate revenue in addition to the fare. As per the contract, the concessionaire has the rights to display visual advertisements inside the rolling stock, the stations or along the route. The company was also allowed to utilizethe land over, under and within the stations for property development and commercial exploitation during the concession period, subject to a limit of 250 square metre per station.

Non-fare revenue

Passenger fare contributes only 30%-40% to the total revenue of a metro project, depending upon which stage it is in; the rest is the non-fare revenue generated through advertisements and property rights. It is these rights that are the bone of contention between the two partners, with the RMGL accusing the HSVP of not allowing them in full, as per the contract.

Sources privy to the dispute between the two told The Hindu that the company also accused HSVP of failing to carry out the development work along the metro corridor as per the Master Plan-2031 and not putting in place a sound feeder bus mechanism, hitting the ridership and causing loss of fare revenue.

The HSVP has rubbished the charges saying the company is levelling false allegations as it is looking for an easy way out of the financial mess it is in because of its own reasons. It has also accused the RMGL of failing to meet its obligations on ridership.

‘Poor management’

Industry experts partially blame the financial troubles of the Rapid Metro on the poor management of the project and bad marketing strategies. The fact that the first Managing Director of RMGL, Sanjiv Rai, was denied an extension and was replaced by Rajiv Banga was enough hint at his “non-satisfactory performance”. It was in sharp contrast to four extensions to ‘Metro Man’ E. Sreedharan before he retired in 2011, and four-year extension to DMRC MD Mangu Singh, said experts.

On the marketing front too, while the RMGL seemed to be wasting its efforts on wrong choices such as running birthday trains to earn revenue, it failed to attract the larger workforce in the Cyber City to use the network. Experts said that tie-ups with companies operating in the Cyber City and lucrative offers to their employees could have helped the RMGL achieve its targetted ridership, especially when the corridor was connected to the DMRC’s Yellow Line.

Extending the RMGL network along the Golf Course Road, the most elite address in the Millennium City, especially when the stretch was being widened to 16-lane highway, for its Phase-II too proved to be an unwise decision. Instead, connecting the Udyog Vihar Industrial Area, housing a large number of garment units and other companies, with the network and extending it further to the Maruti Suzuki plant on Old Delhi-Gurugram Road and bus stand could have added far more numbers to the ridership. In the future, the extension towards Udyog Vihar could also act as a possible link between the DMRC’s Yellow and Blue Lines, further augmenting the ridership.

Financial troubles

The financial troubles of IL&FS, the company that constructed the Rapid Metro, in mid-2018 and the Union government moving an application before the National Company Law Tribunal, Mumbai, seeking suspension of its board of directors on the grounds of massive mismanagement of public funds proved to be the last nail in the coffin of the RMGL.

The RMGL was among the 38 domestic group entities of IL&FS classified as “Red Entity” by the Union government, saying that it could not meet its payment obligations towards even senior secured financial creditors.

The HSVP has said that there is a need for due diligence on the financial activities of the Rapid Metro. The authority officials maintain that nobody knows who the Rapid Metro management had borrowed money from and where they spent it and what fraudulent contracts they signed.

“When a private party comes to develop an infrastructure within the city limits it has to face many challenges and the support of the government is the first thing which is solicited. When a project like this fails for whatsoever reasons, it demotivates private players, investors and even the government. The need of the hour is to get all the associated parties on a common platform so that they are able to play their respective roles and ensure that the project runs smoothly,” said Sarvesh Tiwari, an infrastructure expert who was earlier associated with the Rapid Metro project.

While the two parties battle it out legally in the Punjab and Haryana High Court — the matter is scheduled for hearing on September 17 — the commuters, the most important stakeholder in the matter, keep their fingers crossed for a favourable outcome.