DTC bus fare hike boosts project to involve corporate sector

The recent bus fare hike announced by the Delhi Transport Corporation (DTC) has given a fresh lease of life to the government's ambitious cluster bus fleet project in which a world class bus system will be operated by the corporate sector.

The project was almost shelved two months ago as it was found inviable because of the then existing fare structure and to start the project the government would have required to provide huge subsidy to the private sector.

Describing it as his "pet project", state transport minister Arvinder Singh Lovely said the government will finalise the model to corporatise the private bus system in next one month.

"We have not shelved the project. It may be finalised in next one month," Lovely said.

Almost a year ago, the transport department had finalised a plan dividing nearly 650 bus routes across the city into 17 clusters, each comprising profitable and non profitable routes to be run by one a private operator.

The government wanted to do away with competition and that is why they sought to give one cluster to one corporate entity.

As per the plan finalised by the Delhi Integrated Multimodal Transit System (DIMTS), the transport department will finalise the bus fares, which will go to the government, while the private operator will be paid a fixed amount on the basis of every kilometre travelled. The government floated a global tender in February this year to award the first cluster and accordingly, the lowest bidder Star Bus Ltd, which quoted a rate of Rs47.50 per km per bus (Rs85.87 crore per annum) to run 231 buses, was selected.

However, when the matter came to the Delhi Cabinet for final clearance, finance minister AK Walia opposed it saying the government will have to shell out Rs85 crore per annum to a single operator, which would not be viable considering the financial resources.

He argued that the government will have to spend lot of money on infrastructure projects for the Commonwealth Games and thus it would not be viable to go ahead with the bus cluster project.

As per calculations, if the government had accepted the Star Bus Ltd’s bid, it would have to give a subsidy of Rs25 to Rs27 per km per bus as expected revenue from ticket was estimated to be in the range of Rs22 to Rs25 per km per bus.

But, as the bus fares have been increased sufficiently recently the government may not require giving subsidy and the fixed annual contract amount may come from revenue collection through tickets issued, officials said.

Lovely said during next year's Commonwealth Games, the DTC will have a fleet of 5,000 low floor buses and 2,000 general buses.