The NSW government’s aggressive push to shift commuters onto its Opal electronic ticketing system has driven public transport revenues down by $34 million, despite an increase in patronage.

The state is trying to get public transport users off the old paper ticketing system by offering incentives to sign up for the electronic Opal card, such as ticket discounts and unlimited free rides after the first eight journeys in a week.

The campaign saw 1.2 million Opal cards issued in 2014-15 alone, building to a total of 4 million in circulation, but was also responsible for a 2.7 percent drop in public transport revenue, or $34 million year-on-year.

The fall comes despite the overall price of rail tickets increasing by 2.5 percent as well as higher user numbers across all modes of public transport except ferries.

Train rides were up 3.6 percent over the year, bus rides were up 1.2 percent, and light rail rides increased by 58 percent largely thanks to the inner west service extension, figures released by the NSW Audit Office today reveal.

Overall, Opal users took advantage of 74.5 million free trips using the eight-plus incentive in 2014-15, which the state government has valued at $189 million.

The figure makes up a quarter of all Opal card rides. On Sydney ferries, nearly half of all trips taken in the financial year fell into the free category.

Last year then-Transport Minister Gladys Berejiklian encouraged Opal users to try to get the biggest savings they could from their Opal card as part of promotion for the system.

However, the revenue decline means cost recovery from public transport fares continues its year-on-year drop, with commuters now covering an average of just 18.4 percent of the cost of their journey, down 0.7 percent in 2013-14.

The revenue situation wasn't helped by 15,000 Opal card reader breakdowns in the last financial year, more than half of which took place on public buses. Transport for NSW has been unable to estimate the value of lost revenue.

The NSW Audit Office also discovered 134,000 Opal cards showing a negative balance, collectively valued at $427,000 owing to the state.