Big Indian cities to ride on smaller peer's smart urban mobility drive

Smaller cities and non-metro cities are expected to drive the smart urban mobility growth in the country with various municipal bodies across several tier-II and tier-III cities experimenting with transportation models prevalent in London and Singapore.

Experts feel the traffic forecasts in smaller towns is easier to ascertain as compared to metro cities and, therefore, such experiments can be undertaken easily. Traffic in Mumbai and Delhi is far more erratic than Bhopal and Indore.

One such successful model is the Atal Indore City Transport Service, modelled on the pattern of London, Singapore, Cape Town and Bogota. Atal Indore City Transport Service, a government-funded special purpose, with an initial paid up equity of Rs 250 million being held by the Indore Municipal Corporation and Indore Development Authority in equal proportion, is responsible for running the local bus service.

Some of the bus operators in the city follow the dry lease model of the aviation industry, which means a leasing arrangement, whereby the bus is provided on lease without crew or ground staff. The bus operators running operations with the Indore city transport include MA Travels, Caliber Travels, Nafees Travels, Serco and Priyadarshini Transport.

Funding models for city transport projects

• Viability gap funding (VGF): Grant provided to support infrastructure projects that are economically justified but fall short of financial viability 
   
• Gross cost contract model: This model is based on a per kilometre fee to the operator who buys and runs the buses, the cost of which is calculated on gross basis and not on one route 
   
• Net-cost contract: Under this model, the operator provides a specified service for a fixed period and retains all revenue, the operator has to forecast both his costs and his revenues

Being a government enterprise, Atal Indore City Transport Service employs a competitive bidding procedure for all its ventures. “When the transport service is the purchasing authority (for buses), it awards the contract to the lowest bidder, and when it is the licensing authority (for routes), it awards the contract to the highest bidder,” the city transportation service said, replying to an e-mailed query by Business Standard.

The model has been adopted in Bhopal, Ujjain, Surat, Ahmedabad and Pune. “The model is worth trying provided there is complete clarity on the implementation front. The contractual documents have to be written well and the municipal corporations adopting the model have to take it as partnership,” Kushal Kumar Singh, partner, Deloitte Touche Tohmatsu India LLP.

Singh said the city dwellers should be more acceptable of the new model and should not show reluctance in adopting it. The traffic projections should be meticulously done before implementing the new model, he added.

In the national capital, the Delhi Integrated Multi-Modal Transit System Ltd, a joint venture of Delhi government and IDFC, has adopted the cluster model where one operator is given a cluster of routes for running buses. This works on gross cost contract, where a per-kilometre fee is paid by the government to the operator who buys and runs the buses, the cost of which is calculated on a gross basis and not on one route. Under a net-cost contract the operator provides a specified service for a specified period and retains all revenue, the operator has to forecast both his costs and his revenues.

In Indore, on the other hand, buses are run on three types of contracts net cost model, gross cost model and Viability Gap Funding (VGF) — a grant provided to support infrastructure projects that are economically justified but fall short of financial viability.

Based on World Bank recommendation note on ‘India's Transport Sector, The Challenges Ahead (2002)’, a private partnership model of public transport system was conceptualised, Vivek Aggarwal, the collector and district magistrate, brought in the Indore transport scheme. Currently, Aggarwal is principal secretary, Urban Development, Madhya Pradesh.

The World Bank report had said that the cities with population of more than one million should have urban bus transport corporation, which owns 30 per cent of its own buses and hires 70 per cent of buses from private contractors and operators.

The main source of revenue for the SPV is the monthly premium amount received from the bus operators, advertising revenue and the share of revenue generated through passes.

The sources of revenue for the bus operators are the daily fare box collection, share of revenue generated through advertising on buses and monthly passes.

The overall ridership in Indore is 150,000 passengers a day with the feeder bus network catering to 68,000 passengers. The current fleet size of Atal Indore City Transport Service is 354, which includes 65 CNG buses, 182 diesel buses in two categories (small and mid-sized) and 45 luxury air-conditioned buses.