‘Cartel hand behind low auction prices for car parking lots’

Over the last two years,highest bids received for paid parking lots have seen a decline.

Written by Khushboo Sandhu | Chandigarh | Published: February 27, 2012 1:46 am

With two auctions of the paid parking lots being cancelled in the last two months,there are growing voices that allege a cartel of contractors is operating in the city. While it is not for the first time that bid amounts have witnessed a decline,the Municipal Corporation has been a mute spectator throughout the episode. Over the last two years,highest bids received for paid parking lots have seen a decline.

Two years ago,when the auction of the paid parking lots was held in May 2010,the Municipal Corporation earned a hefty revenue of Rs 3.43 crore by auctioning 12 paid parking lots in different sectors. For some parking lots the contractors bid more than double the reserve price.

However,soon the bubble burst. In September the same year four contractors gave a notice to the Municipal Corporation to surrender the parking lots. The reason given was that the contractors were suffering losses. Sources say that at that time the parking contractors had a tiff amongst themselves and in order to outbid each other made high bids. But soon they reportedly realised that it would not be profitable to pay such prices at the auction.

A fallout of bidding high amounts was that the reserve price for the subsequent auctions increased substantially. The reserve price of a parking lot is fixed at 75 per cent of the highest bid received. The bids that were received in the auction in November 2010 were substantially lower than the auction in May.

The auction that was held in January this year witnessed the paid parking lots receiving prices lower than those received last year. At the recommendation of the auction observers the auction was canceled even though the prices received were more than the reserve price. In the subsequent auction of these parking lots the prices went even lower raising a demand for canceling the auction yet again.

Councillor Pardeep Chhabra says,“The contractors have formed a cartel and divide the paid parking lots amongst themselves. At some of the paid parking lots,the same contractors are working for the past few years whether it is Sector 8,34 or 35. There is a need to include more contractors. Certain reforms are required in the system.”

A group of seven to eight contractors are the ones who run a majority of the 23 paid parking lots. The subsequent auction of the paid parking lots have witnessed these contractors participating in the bidding process. Paid parking lots under the Municipal Corporation are present in Sectors 8,9,17,22,34,35,Lake and Fun Republic.

There are certain paid parking lots that have failed to find takers in subsequent bids and auctioned only after some changes in the conditions.

The auction of the paid parking lot at Fun Republic failed several times over the past few years and was finally auctioned when an adjoining piece of land was combined with it.

Another parking lot in Sector 17 near the District Court complex failed to find takers several times. In fact the auctions for the past one year are fetching prices that are quite near the reserve price.

Another trend that is emerging is that the contractors are now rarely seeking extensions for the parking lots. In fact the paid parking lots are being surrendered before the completion of even one year forcing auction of these paid parking lots.

MC Additional Commissioner Sunil Bhatia says that paid parking lots are allotted through open bidding. “Anyone is free to come forward and apply to participate in the auction. One cannot say that a cartel is operating. It is purely economics. The contractors bid the amount that they feel would yield profit. If the bid amount is higher than the reserve price,then the parking lot has to be allotted. We cannot force contractors to bid higher than what they want,” said Bhatia.

No profit in parking business: contractors

* The paid parking lot contractors claim that managing paid parking lots is not very profitable. The rates of the parking lots have increased substantially,but since these came into existence in 2002,parking fees has not increased.

The fee continues to be Rs 2 for two-wheelers and Rs 5 for four-wheelers.

* A contractor says,“There is a need to increase the parking fee. We had proposed that in some of the parking lots where the inflow of vehicles is very high,parking fee should be on hourly basis. The Municipal Corporation does not do much for improvement of facilities of parking lots even when the revenue earned is high.”

* The contractors claim that apart from the increase in the reserve price of the parking lots,MC imposes a fine of around Rs 50,000 to Rs 60,000 for various violations. Around 10-12 scooters and 3-4 cars are stolen from the parking lots for which attendants face cases.

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