As the Delhi Metro Rail Corporation (DMRC) gears up for the second round of fare hikes amid a tussle between the Delhi government and the Ministry of Urban Development, an important issue that both the departments seem to have overlooked is the financial health of the DMRC.
Recently, Delhi Chief Minister Arvind Kejriwal wrote to the Centre urging them to hold their decision to raise the fare of the metro service in Delhi and asked to review its decision.
The Centre told the Delhi government that setting up a fresh Fare Fixation Committee could be considered if the latter agrees to give over Rs 3,000 crore to DMRC every year.
The Delhi Metro fares were last revised in May. If the fares are revised again, they are expected to go up by a maximum of Rs 10 from October 10.
According to industry experts, a periodic fare hike is a must to keep DMRC's balance sheet healthy and prevent it from becoming another Indian Railways.
DMRC is making a net loss of Rs 378 crore. Since 2009, there has been no increase in fares, while the input cost for the metro service has increased by over 105 per cent in energy, 139 per cent in staff cost, and by 213 per cent for repair and maintenance.
Since then, the cost of electricity has gone up manifold. Cost of per-unit power in 2009-10 was Rs 3.21, which doubled to Rs 7.25 a unit in 2015-16.
DMRC's energy expenditure in 2009-10 was Rs 83.2 crore, which rose to a whopping Rs 520.5 crore in 2015-16. DMRC consumes 65 per cent of this energy for traction, with the balance 35 per cent consumed by other auxiliary services for various passenger facilities such as air conditioning, lighting, fire and hydraulics, and lift escalators, among other things.
The expenditure towards energy constitutes 38 per cent of DMRC's total operational expenses. The DMRC, which suffered a net loss of Rs 708.5 crore in 2015-16, has the liability of returning interest on loan, return of the principal and depreciation.
More than the losses, it is the burgeoning operating ratio that is a bigger cause of worry for DMRC. Its operating ratio was 54.8 per cent in 2009-10, which moved up to 69.4 per cent in 2015-16.