A Tribune Investigation – Punjab Public Transport 4

Public losses, private profits

Punjab Bureau, Chandigarh, September 29. Transport corporations in the public sector in Punjab today face the same fate as Air India does in the aviation sector.

If Air India is deep in the red after the open skies policy which saw private sector airliners mushroom, the two major Punjab state transport undertakings, Punjab Roadways and PEPSU Road Transport Corporation, PRTC, are rapidly going down the same road.

With the implentation of a liberal transport policy of encouraging the private sector, adopted by the Parkash Singh Badal government when it came to power in 2007, public sector operators have experienced a steep fall in market share and piled up huge losses. From a market share of 48 per cent in 2004-05, the share of state transport undertakings (STU) came down to 39 per cent in 2008-09 with the accumulated losses during the period aggregating a whopping Rs 462.03 crores. Punjab Roadways alone lost as much Rs 76 crores in 2009-10.

Key indicators show how badly off the STUs are. In the the transport sector, a major indicator of performance is productivity per bus per kilometre per day. The 2009 report of the Comptroller and Auditor-General (CAG) says that productivity in kms – kilometres done per day per bus – has declined sharply in the case of Punjab Roadways. From 206 km per bus per day in 2004-05, it had come down to 105 km per day per bus. The national average is 313 kms per bus per day. The productivity of PRTC is much better mainly because it enjoys more monopoly routes than Punjab Roadways. Against 306 km per bus per day in 2004-05, it was doing 310 km per bus per day in 2009. Private transport operators in this sector do anything between 350 and 400 km per bus per day.

The losses of the state transport undertakings were primarily because major trunk and profitable routes, that had been traditionally with them have, during the past four years, gradually been overtaken by private transport operators, many of them owned by political bigwigs. Though there has been no change in the scheme that governs public transport in Punjab, which was formulated in 1990 and modified in 1997, private operators allegedly exploit the loopholes to gain more routes.

The 1997 rules state that STUs will have a monopoly on all inter-state routes. On national highways within the state, the share is in the 75:25 ratio between STUs and private operators. On all other routes falling on state highways and other roads in the state, the ratio would be 40:60 between STUs and private operators.

The policy was good when formulated as the idea was to bring in private operators to compete with STUs to improve services and connectivity, especially to neglected areas of the state. Instead, the reverse has happened. The 2009 CAG report observed critically that the scheme was not implemented in letter and spirit. It pointed out that the private operators were allotted excess routes on the National Highways and on monopoly routes in disregard to the scheme. In case of violations, the STUs are required to file petition with the State Transport Appellate Tribunal (STAT).

The CAG report said that 107 petitions filed by the STUs were still pending with the tribunal causing huge loss to the state exchequer.

The Punjab Transport Department issues a limited number of permits for every route at a price. The average is six to eight permits per route. The CAG report revealed that profitable routes operated by the state undertakings have dropped from 219 in 2005 to as few as 90 in 2009. No prizes for guessing who took over the remaining share of profitable routes.

Investigations by The Tribune revealed several methods by which many private operators exploit loopholes to gain routes and access to what should have been profitable or monopoly routes for state undertakings. Among them is that some private operators pick up permits for short distances and then manipulate the rules to get it transformed into a single permit for a larger and more profitable route.

Other private operators are accused of muscling into the time-tables to ensure that they get the best timings during peak hours. There are serious allegations that influential private operators manipulate the timings, so that they get more selling time for tickets at the counter thereby ensuring more passengers. Ordinarily, they get an average of three minutes at the counter but many operators ensure that they get six to nine minutes to book passengers usurping the counter time of STUs.

An example of how some private operators allegedly manipulate the timetable is to ensure that STUs buses are scheduled before and after it. The open secret of the trade is that the buses of the two STUs invariably fail to show up on the timings given, thus giving the private operator more time on the counter to book the passengers. Master Mohan Lal when he was Transport Minister in the Badal government not only admitted to such practices but also charged that the crew of many state-owned buses were in connivance with private operators in missing schedule timings and also carrying a low passenger load.

The CAG report said the main causes for the mounting losses of state transport undertaking was a steep fall in operating kilometres, decrease in fleet strength, overage buses and insufficient crew. These undertakings were unable to induct new buses and replace the over age buses due to their poor financial health and also due to lack of financial assistance from the state government. It also pointed out that un-remunerative sectors, including services to rural and remote areas, still remain largely with the public sector. The CAG pointed out that while state undertakings earned Rs 20.57 per km, they spent Rs 23.65 per km resulting in a loss of almost three rupees a kilometre.

PRTC chairman Ranjit Singh Ballian, a political appointee, however, does not agree that public transport is in the red because of the growing strength of private operators. He says, “Private transporters have not affected us much. It’s just the financial crisis that is making things difficult for us. We have a monopoly on certain routes and this continues to exist. But we get no financial aid either from the Centre or the state government as a result of which has put our finances under considerable strain.”

The government transport union workers are more critical. “PRTC is running into huge losses because the Punjab Government is making policies that are beneficial for private transporters and thus causing major losses to PRTC,” charges Nirmal Singh Dhaliwal, president of PRTC Workers’ Union, AITUC.

Gurdev Singh, senior vice president of the Punjab Government Transport Workers Union (PGTWU), alleges that many private operators not only evade payment of taxes but operate more than one bus on a permit and evade mandatory charges, including adda fee or parking fee inside a bus stand.

As proof, the PGTWU office-bearers cite the allegation made by former Commissioner of Patiala Division Jasbir Singh Bir, who last year decided to seek voluntary retirement from the Indian Administrative Service (IAS) because of his failure to prevent parking of buses belonging to Deputy Chief Minister Sukhbir Singh Badal’s private company, Orbit, in the residential-cum-commercial area of Mohali.

As a result of the skewed transport policy, there are complaints that connectivity with rural and remote areas in Punjab has deteriorated. Public road transport system in rural areas of the Moga district for example, has collapsed in the last couple of years because of poor connectivity. As a result, students, teachers and workers suffer every day. While in some areas, the only consolation is mini-buses, in the rest passengers have to use unconventional modes of transport, including archaic three-wheelers and indigenous “rehras” pulled by diesel pumps. All this is a far cry from the transport revolution that the Badal government promised when it came to power in 2007.

http://www.tribuneindia.com/2011/20110930/main3.htm

The Tribune – A Tribune Investigation : Punjab Public Transport – 3

How the transport policy was manipulated for private profit

Punjab Bureau, Chandigarh, September 28. Soon after it came to power in February 2007, the Shiromani Akali Dal-Bharatiya Janata Party (SAD-BJP) alliance government headed by Chief Minister Parkash Singh Badal decided to review the existing public transport policy. By September that year it unfolded the new transport policy that clearly smacked of favouritism towards the private operators who owned luxury buses.

However, the then Transport Minister Master Mohan Lal masterly couched the bias claiming that by encouraging the introduction of air-conditioned buses, the government would be able to persuade the common man to travel more in buses rather than cars and scooters.

The new tax structure for public transport had the strangest of anomalies – the costlier the bus, the lower the taxes the owner paid. For operators running ordinary buses (meaning non-AC) the tax rate was reduced from Rs 2.50 per km to Rs 2.25 per km – a mere 25 paise. But for air-conditioned buses it was reduced by half from Rs 2 per km to Re 1 per km. And for the super-luxury buses also called integral coaches the tax per km was slashed from Rs 7.50 a km to 50 paise per kilometre – a drastic reduction.

It was around this time that the companies owned by the Badals had started steadily buying or acquiring buses in the luxury sector. They were not the only politicians that were doing that. Representatives from the entire political class whether the BJP or the Congress were not far behind. These included Avtar Singh Henry, a former Congress MLA and Jagdish Sahni, a sitting BJP MLA.

In normal practice if there is a conflict of interest, the individuals concerned should have declared their interests and recused themselves from the policy making process. Instead there was a glaring impropriety of the Chief Minister and other interested political personalities who were in power directly determining the outcome of the policy.

By 2011 when the new transport policy was fully implemented, the companies controlled by the Badals had acquired or taken over 150 such luxury buses. As mentioned in Part 2 of the series that appeared yesterday their acquisitions in the luxury sector totalled the number of such buses owned by the two state-run corporations, Punjab Roadways and PEPSU Road Transport Corporation (PRTC).

The new policy meant that in the super-integral category if, for instance, a bus ran from Bathinda to Chandigarh traversing a distance of 238 kms in the old slab of Rs 7.50 a km the owner would have paid a tax of Rs 1785 per journey. But in the new slab of Rs 0.50 per km, he pays only Rs 119 – a saving of as much as Rs 1,666 per trip in tax.

In the case of HVAC (Heating, Ventilation and Air-conditioning) category, according to the old slab of Rs 2 a km, operators would have paid Rs 476 for a similar journey. In the new slab of Re 1 a km they pay only Rs 238 – a tax saving of 50 per cent on each trip.

In comparison the saving for owners of ordinary buses was marginal. For the same journey, according to the old rate of Rs 2.50 per km they would have paid Rs 595 per trip. In the new rate of 2.25 per km they pay Rs 535.5 making a saving of barely Rs 60 per trip.

The other major concession to the luxury segment operators was that instead of paying tax for 365 days a year, integral buses had an exemption for 150 days a year and HVAC for 75 days a year. Strangely ordinary buses, in which the weaker section travel in, get a tax exemption only for 50 days a year – one third of the concession given to the luxury segment. “The new policy was drafted to favour Badals and their favourites in the private public transport business,” charges Amrik Singh Dhillon, a former Congress MLA from Samrala and a private public transporter himself.

Manpreet Singh Badal, who was the then Finance Minister, told The Tribune that his ministry also raised objections to the manner in which the new policy was tailor-made to suit a selected few, especially those in the luxury public transport sector. He claims that his ministry had even stated in writing that the new tax policy would destroy the state-owned public transport corporations. It is a different story though that till he was in Government, Manpreet did not openly protest or even have his own holdings in buses diluted.

Master Mohan Lal of the BJP, the then Transport Minister, however, denies charges of favouritism being shown to the Badals or other politicians. He told The Tribune “To be honest, I was till then a novice in the transport business. I had no knowledge of who owned buses. My only directions to the then Transport Secretary was that the new policy should be designed to bring relief to the common man while improving the services.”

Instead it has resulted in the opposite. Smaller and marginal players in the transport sector who had been agitating for years demanding the removal of major bottlenecks say they are in dire straits. Baldev Singh, a private bus operator who runs Dasmesh Transport Company, holds the wrong policies of the SAD-BJP government responsible for the plight of smaller bus operators. “Small private bus companies are on the verge of collapse. If the present policies are continued for another two to three years, only a couple of major private bus operators will remain in the business. The rest will be wiped out.”

By Prabhjot Singh with Sushil Goyal, Gagan K. Teja, Puneet Pal Singh Gill, Ravi Dhaliwal and Kusum Arora.

Tomorrow: Private profits, public losses; The Tribune will expose how and why the state-owned bus corporations face the same fate as Air India in the aviation sector.

http://www.tribuneindia.com/2011/20110929/main2.htm

The Tribune – A Tribune investigation: Punjab Public Transport – 2

How the Badals hijacked Punjab’s luxury bus business

Punjab Bureau, Chandigarh, September 27. In the past five years, there has been a decisive shift in the ownership of buses for public transport. While Punjab Roadways and Pepsu Road Transport Corporation (PRTC) were the public sector behemoths that controlled almost 60 per cent of the market share a decade ago, they have since lost their share substantially to the private sector.

The situation is now reversed. Of the 7,500 buses plying on Punjab roads for public transport today, nearly 4,000 belong to the private operators giving them a 60 per cent share. Punjab Roadways, PRTC and its subsidiaries — Punbus and Kilometre Scheme — all put together have only 3,500.

It is not as though there is anything wrong with private players entering the transport sector. In fact, they have considerably improved connectivity, comfort and efficiency. The real issue is how the top state politicians especially Chief Minister Parkash Singh Badal and his son Sukhbir, the Deputy Chief Minister, have now managed to control an even larger share of the expanding private-sector pie. Also, how the transport policy has been tailored to the benefit of private operators.

In Part 1 of The Tribune investigation published yesterday, it was revealed that the private operators have benefited at the cost of the state exchequer, the state-owned public transport organisations and also the poor of Punjab.

Other than the Badals, among the private bus operators are the families of the Speaker of Punjab Vidhan Sabha Nirmal Singh Kahlon, BJP legislator Jagdish Sahni, PPP chief Manpreet Singh Badal, former Congress legislators Avtar Singh Henry, Amrik Singh Dhillon and Jasbir Singh Gill (Dimpa) besides the sitting MLA Amarjit Singh Samra (Congress) and families of former (late) legislators Dilbagh Singh Nawan Shahr and Kirpal Singh Libra.

Parkash Singh Badal in his affidavit submitted to the Returning Officer of Lambi constituency before the 2007 Assembly elections had declared family shares in Dabwali Transport and Real Estate Company and Baaz Transport Private Limited. In the 2009 Lok Sabha elections, Harsimrat Badal in her affidavit declared that her husband, Sukhbir Badal, had 28,551 shares of Rs 10 each in Dabwali Transport Company and 2,570 shares of Rs 100 each in Baaz Transport company.

Similarly, Avtar Henry had also given details of shares he and his wife hold in Kartar Bus Service, besides the 27 trucks he owns as a trucker. Jasbir Singh Gill, alias Dimpa, had also declared his shares in New Piyar Bus Service, though he now claims that he has sold his share in the family owned transport company.

In the Bathinda District Transport Office (DTO) alone, of the 440 buses registered private operators have a total of 270 buses. (Public sector transport companies have 170). These private companies operate their buses to various destinations from Bathinda to the rest of Punjab.

Officially, the Badals directly own 80 buses mainly in three companies — Orbit, Dabwali and Baaz — that dominate the Malwa region.

But in the past five years they are said to have been quietly acquiring controlling interests in at least 10 other private companies and now manage their operations. They now control directly or indirectly 130 of the 270 private buses registered in the Bathinda DTO. Though Manpreet Badal and his father Gurdas, the brother of the chief minister, had shares in the transport companies held by the Badal family, a decade ago there was a family settlement and a clear division was made. Manpreet claims he now owns only three buses registered under the name of Raghuraj Transport company.

When compared to the overall number of buses that ply in the state, these numbers do not look significant. But when one looks at the luxury and super-luxury sectors, the Badals have a virtual monopoly in the Malwa region. In the super-luxury segment all the 17 super-integral buses that provide air-conditioned luxury travel on trunk routes connecting major Punjab cities with Chandigarh belong to the families of the CM and his son.

In the luxury segment, the Badal companies and other private operators dominate. A study of figures available with the four Regional Transport Authorities located in Patiala, Jalandhar, Ferozepur and Bathinda show just how much they actually control. Among the the state-owned corporations, Punjab Roadways has 84 HVAC (High Vacuum Air-conditioned Coaches) and 23 Integral buses and PRTC has 48 HAVC and 14 Integral buses. Together the public sector companies have 169 buses in this segment.

On the other hand, private operators have between them 203 HAVC and 75 Integral buses totaling 278 or two thirds of the total such buses that ply in the state. Put together the Badals allegedly control directly or indirectly 167 of the 464 luxury and super luxury buses that ply in the state equivalent to both Punjab Roadways and PRTC.

Despite concerted efforts, The Tribune reporters could not get balance sheets of private bus operators who have been growing strong financially as is reflected by the growing size of their fleet of buses and new route permits they have got during the past few years. When The Tribune reporters contacted companies controlled by the Badal they refused to comment on either their holdings, the number of buses they own and also their controlling interest in other private corporations.

In Part 3, The Tribune would show how a suspiciously supportive government policy has ensured that private operators can not only recover their costs but make profits too.

Prabhjot Singh with inputs from Sushil Goyal, Gagan K. Teja, Ravi Dhaliwal, Pawan Kumar Jaiswar, Neeraj Bagga and Kusum Arora.

http://www.tribuneindia.com/2011/20110928/main2.htm

A Tribune Investigation – Punjab Public Transport 1

Badals, buses and public losses

How the public transport sector was manipulated by political bigwigs at the cost of the state exchequer and the weaker sections in Punjab

Prabhjot Singh, Tribune News Service

Chandigarh, September 26. When the Lokpal of Punjab, Daljit Singh Dhaliwal, recently ordered an inquiry into the alleged illegal operation of buses belonging to private transporters of Punjab in the Union Territory of Chandigarh he was evidently looking at only the tip of the iceberg.

An investigation by the Tribune team has revealed that there is more to it than just charges of illegal operation in the transport sector. There has been over the years a serious manipulation of transport policy that has favoured private operating agencies, owned by political bigwigs, at the cost of the state exchequer, the state-owned public transport organisations and also the poor of Punjab.

Those who own private transport buses are a veritable who’s who of Punjab politics. The list includes Chief Minister Parkash Singh Badal, his son and Deputy Chief Minister Sukhbir Singh Badal, PPP President Manpreet Singh Badal, Vidhan Sabha Speaker Nirmal Singh Kahlon, BJP MLA Jagdish Saini, former Congress legislators Avtar Singh Henry, Amrik Singh Dhillon and Jasbir Singh Dimpa besides families of the late Akali legislator Kirpal Singh Libra and Congress’ Dilbagh Singh.

In his petition to the Lokpal, a Chandigarh-based lawyer Arvind Thakur challenged the permission granted in 2009 by General S.F. Rodrigues, the then Governor of Punjab and Administrator of Chandigarh, that allowed private bus operators of Punjab to extend their services to the Union Territory. General Rodrigues had reportedly permitted 73 buses belonging to Punjab private bus operators. Inspector-General of Police S L Gakhar, attached to the Lokpal, has been asked to conduct an inquiry and submit his report by November 1 this year.

The charges of illegal operation are only a tiny bone of the many skeletons in the cupboard of Punjab’s public transport sector. When The Tribune conducted an extensive survey of the transport sector of Punjab, it came across a suspiciously high growth of private buses operating in the lucrative luxury and super luxury sectors of public transport in the state. Unremunerative sectors, including services to rural and remote areas, still remain with the public sector.

As a result the two state public sector transport corporations, Punjab Roadways (PR) and Pepsu Road Transport Corporation (PRTC) are facing crippling losses. For instance, Punjab Roadways, the larger of the two state owned transport corporations, had in 2001, 2553 permits to operate on various routes and 2369 buses. By 2009-10, the number of permits declined marginally to 2327 but there was a drastic fall in the number of buses. Punjab Roadways now has only 1,568 buses — 800 less than in 2001 and its losses mounted to Rs 72.6 crores last year. In the PRTC’s case, while its permits and buses remained somewhat stable (it has 1,242 route permits and 1089 buses) it is also facing the heat from private operators. It’s losses are mounting and in 2008-09 amounted to Rs 7.57 crores.

While in 2001, state-owned buses totalled 3513, private operators had 2,766. But by 2009-10 the situation was totally reversed. While state owned buses have declined to 2657, buses owned by the private sector have grown to 3,949 – almost 1,200 more in the past decade or almost 25 per cent growth much of it coming in the last four years. The kilometres covered in these two sectors also tell the same story. While kilometres traversed by the Punjab Roadways buses have decline from 6.74 lakh kms in 2000-01 to 4.40 lakh, the kilometres logged by private bus operators have gone up from 6.82 lakh to 9 lakh during the same period.

But it’s not just the numbers that tell the story. It’s the growth in the highly profitable luxury sector as well as permits for prime time operation as highly remunerative routes that are most revealing. For instance, while PR and the PRTC have only 132 luxury buses, private operators have 203. And in the slightly better class known as integral buses, while the state owned sector has only 37 buses, the private operators have 75. And in the super-integral class, the state owned buses have been left out and the private sector has only 17 – a virtual monopoly.

Overall, in the lucrative luxury segment, while the state owned sector has only 169 buses, private sector dominate and now has 293 buses. No prizes for guessing who among the private operators dominate this sector. It is estimated that the CM and his son Sukhbir, control directly and indirectly 167 buses in the luxury sector. These luxury buses are the ones that enjoy a major tax concession which the Badal government gave in 2008 and implemented from 2009. Not surprising that it happened when they were in power.

http://www.tribuneindia.com/2011/20110927/main1.htm