After Reversing Buyout Decision, Maharashtra Cabinet Set To Resolve Mumbai Metro-1's Rs 1,700 Crore Debt Crisis

Swarajya Staff

Jul 05, 2024, 12:45 PM | Updated 12:44 PM IST

Mumbai Metro. (MMRC/X)
Mumbai Metro. (MMRC/X)

After withdrawing its decision to acquire Mumbai Metro-1, the Maharashtra cabinet has directed MMRDA's executive committee to consider clearing the Rs 1,700 crore debt owed by Mumbai Metro One Private Limited (MMOPL) to its lenders.

Mumbai Metro-1, city’s first metro corridor, is the only corridor executed through a public-private partnership.

This 11.4-km corridor, which began operations in June 2014, links the eastern and western suburbs to the Western and Central Railway networks.

It is operated by a special purpose vehicle, the Reliance Infrastructure-promoted MMOPL, which has encountered several disputes.

Currently, Reliance Infrastructure holds 74 per cent equity in MMOPL, with the remaining 26 per cent held by the Mumbai Metropolitan Region Development Authority (MMRDA).

The decision was taken to avoid corporate insolvency for MMOPL, following a debt settlement agreement signed in March 2024.

As part of the agreement, MMOPL committed to a one-time payment of Rs 1,700 crore to settle its entire debt, with MMRDA and MMOPL making an upfront payment of 10 per cent, Rs 171 crore, to the lenders.

Previously, in March, the state cabinet had approved the purchase of R-Infra’s majority stake in Metro-1 for Rs 4,000 crore by MMRDA, following a request made to the state government in 2020 due to financial losses incurred during the Covid-19 pandemic.

The buyout would have allowed MMOPL to exit the project.

However, lack of funds with MMRDA, the outdated Metro-1 system, audit concerns, and legal complexities all contributed to the decision to halt the purchase.

According to reports, following the new directions from the cabinet, the MMRDA commissioner will soon convene a meeting with all lenders of MMOPL to deliberate on the matter.

Between April 2023 and June 2024, MMOPL has regularly paid interest to the lenders, amounting to over Rs 225 crore.

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