CCI asks Delhi govt to invite bids for bus service

NEW DELHI: Concerned over increasing road accidents in the national capital, the Competition Commission of India (CCI) has asked the Delhi government to replace the current system of awarding "discretionary permits" to Blueline bus operators with a competitive tendering mechanism.

"Competitive tendering should be the criterion for choosing franchisees in these (various economic and uneconomic) routes," CCI member Vinod Dhall said in a letter to the Delhi chief secretary about a fortnight ago.

Dhall has also sent a copy of CCI-commissioned study on the public transport system in the country to Delhi government with the hope that "the administration may find it useful at a time when it is seized of the problem related to Blueline service".

Dhall said that the system of competitive tendering would improve the city transport by introducing competition for the road "instead of the current killing on account of competition (among Blueline buses) on the road".

Most of the accidents in the capital can be attributed to reckless driving by Blueline bus drivers who compete with one another on crowded streets to pick up passengers. There are about 4,000 Blue Line buses on Delhi roads and have claimed more than 70 lives this year, evoking large public outcry against the operators. Last year, these buses were responsible for more than 100 deaths.

Dhall suggested that under the competitive tendering model, the state government can invite bids from qualified operators for running buses on specific routes, which may or may not be commercially viable.

The qualified operators would include only those who satisfy pre-determined criteria such as proven experience, minimum number of buses and repair and recovery facilities.

The pre-qualification criteria will ensure that only serious operators with the capability to maintain vehicles and provide decent public transport service are allowed to run buses.

The Commission also suggested that commercially viable routes should be awarded to those bidders who offer to provide service at minimum cost through an open and transparent competition. It said that the state government could also contemplate Universal Service Obligation (USO) or introduce Viability Gap Funding (VGF) scheme to subsidise operation of buses on commercially unviable routes.

The contract for running buses on commercially unviable routes or off peak timings can be given to those operators who demand minimum subsidy, it suggested.

Dhall said the system of competitive bidding would ensure decent transport facilities to commuters at minimum cost.

As regard the state transport departments which are currently engaged in giving permits, the CCI said, it could be transformed into modern regulators with the responsibility for maintaining oversight on public transport system. State transport authorities could also be assigned the task of ensuring reliable and affordable bus services to commuters.

Dhall pointed out that an NCAER study on public transport, which was commissioned by CCI, revealed that the system of competitive tendering in US cities has contributed to cost reduction between 40-46 per cent.

Similarly, in Goteborg, Sweden, reforms led to a 100 per cent increase in cost recovery and 30 per cent decrease in public subsidy, Dhall said.

He also pointed out that post-reforms, the bus service supply in UK (outside London) improved by 24 per cent and the frequency by 21 per cent. In some other European countries, reforms increased the efficiency of public transport by more than three times.

In London, competition-led improvements reduced the operation cost by 35 per cent and subsidies by 47 per cent, Dhall said. According to one estimate, in the absence of competitive contracting, costs for London transport would have been 15 billion higher between 1985 and 2001, he added.