E-buses, privatisiation of bus transport services: Govt takes the wheel

The urban development ministry has advised cities to privatise bus transport services as part of a clutch of urban renewal programmes. At the same time, the ministry will push for conversion of city buses across India to become electrically operated. 

“Rolling stock (buses) should not be part of the working plans of the municipal corporations,” said Rajeev Gauba, secretary of the ministry of urban development, in a chat with Business Standard to mark three years of the National Democratic Alliance government. 

The ministry has instead asked the city bosses to build core infrastructure to run the city transport services, which will include a regulatory system for setting the tariff of the bus services, an IT-based tracking system for buses and building of adequate bus shelters.

The advise is quite the opposite from that of Jawaharlal Nehru National Urban Renewal Mission (JNNURM) that was rolled out by the previous United Progressive Alliance government. It had set aside a large component of its financial support for the cities to buy buses, many of them low floor ones. For many cities, those buses were the first introduction to a regular public transport system. 

As Gauba explained, it makes no sense to load the limited ability of the municipalities with that of making bus services run seven days a week. He said many of the towns which got the buses had ended up putting them in the bus depots instead. An example is Kanpur city in Uttar Pradesh which got a fleet of 270 buses in April 2010 under JNNURM. District Magistrate Kaushal Raj Sharma told Business Standard hardly any of these buses were in working condition. Many of them are abandoned at the Jhakarkati bus station, from where interstate buses ply. The annual maintenance contract for these buses signed with a Lucknow-based automobile dealer company GoldRush Sales and Services is defunct.

Those cities with existing fleet getting support from the Centre will also be encouraged to hand over the services to private bus operators, the secretary said. The cities needed to rapidly develop urban metropolitan transport agencies which would plan for the emerging needs. He agreed that the expansion of Metro rail there was an even greater need for a bus transport system in the cities but did not feel this called for a corporation-run one. He said reforms in the transport sector is vital to make the Indian cities transition to the needs of the 21st century habitation for the public. Incidentally over the weekend, inaugurating the latest stretch of Delhi Metro that will run under Jama Masjid and Lal Qila, Urban Development Minister Venkaiah Naidu said around 530 km more of Metro projects are under construction in various cities and another 800 km are likely to get the approval from state governments. 

On electric-powered buses, Gauba said the ministry’s green mobility scheme is meant to encourage buses to make the switch over from diesel. A Brookings India paper by Rahul Tongia says the change could be attractive if power companies created “a new electricity consumer category for electric vehicles that includes aggressive time-of-day pricing (cheap charging when power is surplus)”. The secretary was referring to the launch of India’s first fleet of electrically powered buses and taxis in Nagpur by the Minister for Road Transport and Highways, Nitin Gadkari on Friday. 

The advice on public transport and green mobility are part of the two national level projects launched from 2014 by the urban development ministry. The Amrut project focuses on improvement of waste management, improvement of slums and of water supply among others, while the smart cities project stitches technology into the management of the cities.

To finance both these projects, 18 cities have already been rated from AAA to A minus for issue of municipal bonds by the rating agencies, Gauba said. 

The list shows Kolkata tops with a grade of triple AAA, Navi Mumbai is at AA plus, while Lucknow is at A minus. He acknowledged that it will take some more time to complete the work on 300 cities to make them ready to be rated. The original target was March, 2017.   

Those which have already been assigned grades are in the process of appointing transaction advisors to guide them to the markets. For most of these cities, the reasons to approach the markets is to raise money for Metro projects. The secretary said just like the bus services, the Metro projects will not be run by the corporations but by special purpose vehicles in which the corporations would hold stakes. The Indian debt market for municipal bonds is very thin. A CARE Ratings paper estimates that CARE’s estimates suggest that about Rs 1,500 crore could be raised through these bonds annually “by the larger municipals with investment grade.It is assumed that the larger ones with a good credit rating could be the ones to access the market to begin with”. 

According to the secretary, the ministry has over the years discovered that despite prodding the cities were unable to make reforms happen on their own. The Centre has consequently encouraged them to use the capacity available with the state governments like the state water and electricity boards to upgrade their assets instead of waiting to develop their own capacity. It has also encouraged the cities to actively involve the people in the makeover of urban areas. In cities which typically qualified for the tag of smart cities in the first round, the people who provided fresh ideas were often the key reasons for their success.