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Mumbai Metro Starts With Prayers - and Dispute Over Fares

Mumbai Metro
Mumbai Metro opens to the public on June 8, 2014 in Mumbai, India. Photographer: Kalpak Pathak/Hindustan Times via Getty Images

June 9 (Bloomberg) -- Mumbai’s metro rail, delayed since 2011 and heading for a dispute with the government over fares, began service yesterday with thousands crowding the station to witness Hindu priests offer blessings.

Indian billionaire Anil Ambani-controlled Reliance Infrastructure Ltd.’s unit Mumbai Metro One Pvt. will charge a promotional 10 rupees (17 cents) for a one-way ticket for the first 30 days, and later increase it to as much as 40 rupees, according to its website. The regional government wants it to charge between 9 rupees and 13 rupees in accordance with a contract it signed, Business Standard reported yesterday, citing Maharashtra Chief Minister Prithviraj Chavan.

The dispute highlights India’s problem as state control on prices, including electricity and gas, hinders investments in infrastructure and hobbles the $1.8 trillion economy, according to Standard & Poor’s Indian unit. Newly elected Prime Minister Narendra Modi has promised bullet trains and reduced dependence on cars as he pushes for more investment in public transport.

“Disputes over pricing and tariffs deter investments and that should be avoided when so much money is required for infrastructure,” Dharmakirti Joshi, chief economist at Crisil Ltd., S&P’s local unit, said by phone from Mumbai. “The infrastructure itself is always playing catch-up, and we’re building today what should’ve been built yesterday.”

Chief Minister Chavan told reporters in Mumbai yesterday the dispute would be settled according to clauses in the contract with Reliance Infrastructure.

‘Not The Time’

“This is not the time to ask such questions,” Ambani told reporters at the inauguration ceremony in Mumbai, when asked for comments on the dispute over fares.

Ambani and his wife Tina Ambani, a former Bollywood movie star, were part of the crowd that got on to one of the train’s pink and white cars. The train was decorated with flowers and took 27 minutes to travel the 12-kilometer stretch.

Before taking the escalator up to the platform, the Ambanis prayed on the station’s ground floor. About 40 children sat on the carpeted floor in front of idols as two priests chanted prayers. Police officers struggled to control the rush of reporters, cameramen, passengers and children.

New York, China

Reliance Infrastructure shares rose 3.1 percent to 810.90 rupees at 9:40 a.m. in Mumbai, headed for the highest close since January 2011. The benchmark S&P BSE Sensex climbed 0.5 percent.

India now has about 225 kilometers (140 miles) of metro rail lines, almost all accounted for by New Delhi’s 190 kilometers. That compares with about 1,700 kilometers in China and New York City’s 1,062 kilometers of passenger track.

India needs to increase its total more than 10 times to at least 2,500 kilometers by 2031 to accommodate the expected surge in intracity commuters, reduce pollution and cut road fatalities, according to Venugopal Garre, Manish Agarwal and Saurabh Mishra, Barclays Bank analysts in Mumbai.

Infrastructure in India has failed to keep up with the demands of a population that’s the second biggest in the world. Former Prime Minister Manmohan Singh vowed a decade ago to make Mumbai another Shanghai even as creaky infrastructure, real estate that is among the most expensive in the world and urban squalor remain hallmarks of India’s financial center.

Cutting Commute

The Mumbai metro, whose construction started in 2007, connects the northwestern suburb of Versova to Ghatkopar in the east and was originally scheduled to commence service at the end of 2011. Reliance Infrastructure owns a 69 percent stake in the Mumbai Metro One Pvt. venture, which is building the metro and will operate it, while the Mumbai Metropolitan Region Development Authority holds 26 percent, according to Mumbai Metro One’s website.

An estimated 200,000 people rode on the metro on its first day of operation, the venture said in an e-mailed statement yesterday.

Trains will run on an elevated line with 12 stations and the system is designed to reduce a 90-minute commute across the breadth of the city to 20 minutes, according to the website.

The Mumbai metropolitan region needs $60 billion of investment in public transportation over the next 20 years and the current plan falls short, according to estimates by Shirish Sankhe, Mumbai-based director at McKinsey. In a 2010 study, the consultant said India must spend $2.2 trillion by 2030 on urban transportation, housing and office space to boost infrastructure.

A monorail opened in Mumbai in February. On completion of its second phase, it may ferry at least 150,000 passengers a day -- a fraction of the city’s commuter population -- over a 20-kilometer stretch, according to the MMRDA’s website.

To contact the reporters on this story: Adi Narayan in Mumbai at anarayan8@bloomberg.net; Rakteem Katakey in New Delhi at rkatakey@bloomberg.net

To contact the editors responsible for this story: Stanley James at sjames8@bloomberg.net Jim McDonald, Sam Nagarajan

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