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Spat over unpaid bills drives public transport initiative off course

Spat over unpaid bills drives public transport initiative off course
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First Published: Wed, Jan 19 2011. 10 52 PM IST

Blame game: A Delhi Transport Corp. (DTC) bus. While the DTC says the Centre is yet to release a second tranche of funds--due last June--the Union urban development ministry says bus makers have not m
Blame game: A Delhi Transport Corp. (DTC) bus. While the DTC says the Centre is yet to release a second tranche of funds--due last June--the Union urban development ministry says bus makers have not m
Updated: Wed, Jan 19 2011. 10 52 PM IST
Mumbai: An initiative to improve public transport in cities across India is being thrown off course even as the Central government, state transport bodies and bus makers argue over unpaid bills and unmet targets.
Bus makers say they are yet to receive full payment for supplies under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), launched by the Central government to help bolster mass transit systems in India’s rapidly expanding cities, among other measures.
Blame game: A Delhi Transport Corp. (DTC) bus. While the DTC says the Centre is yet to release a second tranche of funds--due last June--the Union urban development ministry says bus makers have not met quality benchmarks and that the states haven’t delivered on infrastructure goals. Ankit Agrawal/Mint
The Central and state governments are supposed to share the cost of the programme. While state transport undertakings, or STUs, say the Centre is yet to release a second tranche of funds that was due in June last year, the Union urban development ministry says bus makers have not met quality benchmarks, nor have state governments delivered on infrastructural goals set under the programme—to which the funding is linked.
JNNURM, launched by Prime Minister Manmohan Singh in December 2005, is the single largest government initiative for the planned development of key cities. It’s focused on providing economic and social infrastructure, basic services to the urban poor, urban sector reforms and strengthening municipal governments and their functioning. Urban infrastructure and governance form a subsidiary mission of JNNURM to be implemented over a period of seven years. It will initially cover around 60 cities.
In order to avail themselves of the assistance available under JNNURM, eligible cities were required to formulate a medium-term city development plan (CDP), detailed project reports (DPRs) and draw up timelines for the implementation of urban sector reforms.
Bus manufacturers such as Tata Motors Ltd, Ashok Leyland Ltd and Volvo Buses India Pvt. Ltd are yet to be paid a combined Rs1,000 crore under JNNURM, says Sugato Sen, senior director at the industry lobby Society of Indian Automobile Manufacturers, or Siam. This includes payment for buses received as well as pending deliveries. “In some cases, the STUs have not been taking delivery of the buses, saying they are not yet ready,” Sen said.
The Calcutta State Transport Corp., for instance, ordered a large number of buses, of which some 70-80% are standing idle at Kharagpur, he said. “They are now saying they will take deliveries of only half of them as they don’t have money for the rest.”
Tata Motors received orders for 5,000 buses from various states, of which it has delivered 4,500, said spokesman Debasis Ray. “Several entities have not paid,” he added, declining to name the states that haven’t given money, or how much they owe the company.
Ashok Leyland’s spokesman Vinod Chacko said, in an emailed response, that the company has delivered 3,900 out of 5,000 buses ordered under JNNURM, but declined to comment on payment.
Akash Passey, managing director of Volvo Buses India, said his firm has supplied 700-800 buses under various phases of the project. Most payments have been cleared, but the company “has some serious outstanding from one or two corporations”, he said.
Such lapses, Passey added, can make bus manufacturers averse to participating in programmes such as JNNURM.
Unpaid share
West Bengal state transport minister Ranjit Kundu said the state has purchased a little over 800 buses, and is yet to take delivery of another 200 air-conditioned buses.
He said in a letter to the state transport department late last year that Tata Motors had demanded Rs58.03 lakh for delivering 93 out of 125 buses. But he denied that the state government had defaulted on its share of the payment, which is 65% of the bus price.
The Centre, however, has paid only half its share of 35%, Kundu said. “Maybe the auto makers are talking about the money the states are yet to get from the government of India.”
Under the second stimulus package announced in January 2009, states are supposed to get Central assistance to purchase a total 15,260 buses.
Sanjeev Kumar Lohia, officer on special duty for urban transport at the Union urban development ministry, said the government has already disbursed Rs1,200 crore of the promised Rs2,100 crore, and the rest will be paid out by March.
He said payments had been delayed as STUs have not been proactive, and bus makers have not met minimum quality standards. “There are major deficiencies and the conditionalities have not been fulfilled,” he said.
Quality concerns
Lohia cited the example of buses supplied by Tata Motors to Ahmedabad State Transport Corp. The undercarriages of the buses, he said, were corroded. “How can you have corrosion in new buses?” There are quality issues with both Tata Motors and Ashok Leyland, he added.
The Ahmedabad Bus Rapid Transport System, or Janmarg, placed orders for 485 buses with Tata Motors and Ashok Leyland, said a senior Janmarg official, asking not to be named.
Tata Motors has delivered 94 buses, of which 25 had corrosion in the undercarriage. Janmarg has not paid for the faulty buses and refused to take delivery of the rest until the problem is solved, the official added. “The only reason for non-payment for buses is faults like corrosion,” he said. “We are willing to pay if these problems are solved.”
The official also said Ashok Leyland’s prototype bus had not been approved, and the bus maker was yet to provide another one for evaluation.
Tata Motors’ Ray said there were issues with some of the buses it had delivered, but added: “We reject the contention that payments have been held for quality reasons... Everyone knows the real reasons for the payments not being made, but we would not like to air them.”
Delhi Transport Corp. (DTC), Mumbai’s BEST Services and Andhra Pradesh State Road Transport Corp. (APSRTC) also said they have not received the second tranche of funds from the Central government.
The Delhi government has paid 65% of the cost of the buses it has acquired under the programme.
The remaining 35% was to be paid by the Centre, said M.P. Singh, deputy chief general manager, strategic business unit, at DTC. “Of this, only half has been released, the remaining half in the second instalment is still awaited,” he said.
Unreasonable demands
A senior Andhra Pradesh transport official said the Centre was linking the release of funds to factors such as the creation of a special purpose vehicle for JNNURM, land reforms and so on. The official, who declined to be named, said some of these demands, such as the creation of an SPV, are unreasonable, while others cannot be implemented so soon.
“There’s no point in creating an SPV when APSRTC is already running 3,000 buses in the state. It will only complicate the functioning,” he said.
The official added the state had purchased 1,540 buses under JNNURM, and there were no outstanding dues against bus makers.
The Union urban development ministry’s Lohia also blamed the delay in the release of funds on the state governments’ failure to improve transport infrastructure by building bus depots and service stations. “We can’t put the money into a bottomless pit,” he said.
The ministry has also set design and engineering specifications for buses under JNNURM. For instance, 20% of buses for cities with at least one million residents have to be low-floor, with a ground clearance of up to 400mm.
While the blame game continues, some transport experts say schemes such as JNNURM can benefit from a better monitoring mechanism for funds and improved coordination between the Central and state governments.
“These mechanisms are too weak,” said Geetam Tiwari, professor of transport and planning at the Indian Institute of Technology, Delhi. She said instead of improving public transport, some cash-rich cities have diverted JNNURM funds to make flyovers and “car-friendly” roads.
“If we want to improve the state of public transport in this country, bus makers have to be given a signal that it’s a long-term project,” she added. “A one-time order doesn't make business sense for them.”
Soumitra Trivedi from Ahmedabad and Romita Datta from Kolkata contributed to the story.
shally.s@livemint.com
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First Published: Wed, Jan 19 2011. 10 52 PM IST
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