Public private participation in public transport, specifically in bus services is a huge opportunity waiting to happen. Indore has already shown the way and UP has just advertised for operators willing to come in with at least 4000 buses each
It is said that opportunity is just the other side of crisis. Going by the adage, the Indian public transportation scenario – with the blaring horns, overflowing buses, accidents and in some cases, by its sheer absence, represents both a crisis and an opportunity of mammoth scale.
Giving a concrete shape to the opportunity is the example of the newly implemented model of Indore and the National Urban Transport Policy (NUTP), drafted in 2006. The biggest opportunity comes from the policy’s call for the involvement of private companies in providing mass public transport services in Indian cities.
Public transportation in India has traditionally been a government monopoly. It was only after 1980 that some states started permitting privately run services. Until then most of the transportation services were run by State Transport Corporations. However, the increasing number of personal vehicles on the road, in spite of the rising fuel costs, bears testimony to the fact that state corporations have failed to meet the demand for public transport.
“There are two reasons for the current state,” says Alok Nath Bansal, a retired World Bank expert on transportation. “On the one hand, government run public transport is incurring very high costs and on the other, the private operators do not seem to follow any rules”… “In many places, the private sector is confined to tempos, three-wheelers and, mini buses.,” he points out.
According to a review done by the Association of State Road Transport of the performances of all STUs (State undertaking transport Utilities) for the year 2005-06, the net loss was a whopping Rs. 2660 crore excluding Andhra and Pune!
The Indore model
However, change is on its way. Take the case of Indore with a population of 2.72 million in 2001. Towards the end of 2005, local authorities established a public limited company -- Indore City Transport Services Ltd. (ICTSL) – to take care of the city’s public transportation needs.
“The company is an umbrella organization in charge of implementing the new model,” says Vivek Aggarwal, Executive Director, ICTSL. “It is based on a public-private partnership model. We provide the regulatory framework and the private companies operate the routes.”
At the core of ICTSL experiment lies the belief that cities should develop their own regulatory and enforcement capabilities. This framework should then promote competition in public transport in the city while ensuring financial viability of the operators.
 |
| Advertisement issued by the UP government in newspapers. |
Explains Vivek,”Five kinds of private operators are now providing their services to the Indore public; bus operators, advertising team, pass operators, GPS and public information system operators and those building bus stops”.
The process was tender based and 17 routes had already been selected. Now premiums were quoted, the maximum limit being Rs. 7000. The pricing, minimum number of buses (4 buses per route) etc., were all pre-decided.
Vivek points out that the project has not achieved the status of a money-spinner yet. “But the things are fast moving ahead,”.
“As the density of population and the number of routes are increasing, we are bringing more and more buses on the road”, says Roshan Aggarwal, director of Dayajeet Nimay Logistics, one of the private bus operators involved in the project.
How is it going? Roshan Aggarwal points out that “When we started out, we had a minimum fleet of buses but now we own a fleet of 110 buses. Apart from that we have also come out with a new fleet of radio taxis plying on the Indore road. Income is not just from the fare; we also carry advertisements inside and outside our buses, out of which we were earning Rs. 25,000 per bus per month. That too has gone up”.
| DARE/estimates | |
| Basis | |
| Singapore population | 4,600,000 |
| Number of buses | 300 |
| Number of buses per million | 65 |
| London Population | 8,000,000 |
| Number of buses | 8,000 |
| Indian buses per million population (assumed) | 500 |
| Percentage for private operators | 0.7 |
| Organized private operators | 0.5 |
| Total number of cities taken | 35 |
| Estimated number of buses | 54,000 |
| Estimated total for private sector | 38,000 |
| Estimated organized private sector | 19,000 |
| The rest of the country, including long distance services would also need a significant number of buses and our estimate is that this will be three times the above number. | |
| Total countrywide estimate for organized private sector | 76,000 |
| How big is this number? To give you a sense of scale, Ashok Leyland sells slightly more than a thousand buses every month in the country. | |
| Volvo sold 3,672 buses in the first quarter of 2008, worldwide! So, we are talking some really big numbers here. | |
| Note: An efficient transport system is not a one size fits all system. Buses of different capacities (and sizes) should be used depending on route needs. | |
| DISCLAIMER: This data and analysis are indicative and Cybermedia makes no warranties about its accuracy. You are advised to do your own analysis if you are evaluating a similar venture. | |
Subscribe to this comment's feed
| < Prev | Next > |
|---|
