Competition Reforms in Bus transport sector (Madhya Pradesh & Gujarat) National Advocacy Plan (CREW Project) Shreya Kaushik, CUTS International CREW NRG-IV Meeting, 8 th April, New Delhi

Outline Key Issues (State Level) ⁻ Development of ‘Madhya Pradesh Transport Regulatory Authority’ ⁻ Advocating for bus transport reforms in Gujarat Key Issue (National Level) ⁻ Making Public Procurement of Bus Transport Services competitive 2

State-Level Issues Development of ‘Madhya Pradesh Transport Regulatory Authority’ CURRENT SITUATION Liberalised public transport sector after MPSRTC’s disbanding in 2005 DOTs function more as administrative body than performing regulatory functions (limited to licensing and fare regulation) Fare determination mechanism: RTA decides the fares that lacks an inclusive approach Low accountability of private bus operators: Gap in transport availability on non-profitable routes and off peak hours Provision under the Planned Road Transport & Safety Bill

State-Level Issues Development of ‘Madhya Pradesh Transport Regulatory Authority’ EMERGING ISSUES Low access to passengers on non-profitable routes (~ 60% respondents complained about availability in intercity services) No accountability mechanism for private operators by the state: Delayed or cancelled bus trips (grievance mechanism absent) Lack of route rationalisation  unequal distribution of routes Lack of mechanism of PPP in intercity segment Intra-city transport: BCLL acts as both operator and regulator, creating a conflict of interest 4

Work Plan & Envisaged Outcome KEY QUESTION: Need for a body having the authority and knowledge for regulating MP’s bus transport sector (economic and administrative) Govt. interested in developing a ‘Madhya Pradesh Intercity Transport Authority’ MPITA in the inception stage and need refining (functional and administrative) CUTS to provide ‘knowledge partnership’ to DoTransport (Govt. of M.P.) to incorporate key functions like route rationalization, fare setting, better public private partnership, etc. 5

State Level Issues: Advocating for bus transport reforms in Gujarat CURRENT SITUATION Stage carriage monopoly to GSRTC on intercity routes (1994 Govt. Gazette) Shrinking fleet size of GSRTC, led to the entry of private operators High operational cost of GSRTC (about US$47mn in ), burden on the state exchequer Private operators deemed illegal on the stage carriage routes (Only 2%-18% respondents found service of the public operator significantly better than private competition) 6

State Level Issues: Advocating for bus transport reforms in Gujarat EMERGING ISSUES Decline in GSRTC’s passenger carrying capacity from 1.27 billion in 2003 to 0.84 billion in 2013 Private operators incurring additional transaction costs and ‘rents’ There is need to let private operators enter inter-city market Intra-city Transport: ⁻ AMTS enjoys a monopoly, even though incurring high operational losses (Rs1.7bn in alone) ⁻ Shrinking fleet size and private players are sub-contracted for fleet operation ⁻ They have to attach their fleet to AMTS with no individual recognition 7

Work Plan & Envisaged Outcome KEY QUESTION: Need for policy refinement for an efficient bus transport sector in the state Political Economy Analysis of continuing 1994 Gazette order? ⁻ Primary and secondary research (winners Vs losers) ⁻ Evidence to sharpen advocacy efforts Need for a ‘State Road Transport Regulator’ ⁻ Development of ‘Concept Note’ in line with MP’s experience ⁻ Covering issues related to route rationalisation, better PPP mechanisms, fare setting etc. Reducing revenue burden of AMTS with better PPP mechanism 8

National-level Issue: Making Public Procurement of Bus Transport Services competitive Ahmedabad (Gujarat) and Bhopal (MP) have one operator each in the BRTS segment ⁻ Chartered Speed Carrier (Ahmedabad) and Capital Roadways (Bhopal) Does ‘eligibility criteria’ for BRTS bidding, limits the number of worthy operators hence limiting competition (lack of an institutional guideline on competitive procurement process) 9

Work Plan & Envisaged Outcome KEY QUESTION: Need for infusing competition principles in public procurement of buses in BRTS Plans of liaising with CCI: Need for inducing competition in public procurement with evidence from the DCR CUTS to facilitate discussions between CCI and relevant departments/officials in the two states to develop ‘institutional guideline on competitive procurement’ of bus services 10

Thank You!!