India’s largest Metro rail does not have a mechanism in place to calculate the profitability of different lines: Report
Delhi MetroRail Corporation (DMRC) is reportedly in the dark about the profitability of individual lines as losses are calculated for the network as a whole.
- This is a headache for the Delhi government because it wishes to share losses on a soon-to-be-built Metro line with the central government.
- If there isn’t a system to adequately share the
lossfrom each new phase of the Metro system, then it could delay the construction of future lines.
This is a headache for the Delhi government because it wishes to share losses on a soon-to-be-built Metro line with the central government. The Delhi metro criss crosses three different states that fall within the National Capital Region.
The finance department of the DMRC, which is a 50-50 joint venture between the two, clarified last week that losses are calculated for the entire network as a whole as opposed to individual lines - a glaring problem for a metro system that has been built in phases.
If there isn’t a system to adequately share the loss from each new phase of the Metro system, then it could delay the construction of future lines. This will affect people living outside Delhi, as the new lines of the Delhi Metro are expected to connect people in the outer National Capital Region to Delhi.
The news comes as construction on the Phase IV of the Delhi Metro, which is expected to cost ₹450 billion, has been stalled after being approved in December 2018. This is largely due to the ongoing friction between the state government of Delhi, which is run by the Aam Aadmi Party, and the BJP-led Union Housing and Urban Affairs Ministry over the sharing of operational costs and losses.
The Delhi government reportedly wants equal loss-sharing and also wants the DMRC to act as a guarantor for the loan extended by
The absence of a system to calculate individual losses also affects the arrangement for the existing phases of the Metro network. The Delhi government and central government are required to share costs on Phase I and Phase II while the former is expected to bear all the losses for Phase III.
The rail network’s losses have come under scrutiny following two consecutive rate hikes that were imposed in 2017. The rate hikes resulted in declining ridership, which was offset by the sale of branding and advertising rights at stations to different companies.
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