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No feasibility study for PBS Panchkula, private firm given exclusive rights over ad revenue from 8 docks

Under the project, which was inaugurated on August 21, 2019 by CM Khattar, the civic body paid a total of Rs 2.09 crore to the firm, including capital cost and maintenance charges for three years.

Written by Pallavi Singhal | Panchkula | January 8, 2021 5:03:11 am
Manohar lal khattar, Haryana Public Works Department, Panchkula Municipal Corporation, Public Bicycle Sharing project panchkula, indian express newsAs per documents accessed by the Indian Express, the firm had quoted Rs 1 crore as capital cost and Rs 1,600 per cycle per month as operating cost. (Representational)

Even though the Haryana Public Works Department (PWD) Code states that a feasibility study must be conducted before a public-private partnership, the Panchkula Municipal Corporation had failed to carry out the same ahead of finalising its partnership with Yaana Private Limited for the Public Bicycle Sharing project, which commenced in 2019. Now, burning a hole in the civic body’s pockets, the private firm charges Rs 1,520 per month per bicycle for the maintenance of a total of 200 bicycles at 20 docks.

Under the project, which was inaugurated on August 21, 2019 by CM Khattar, the civic body paid a total of Rs 2.09 crore to the firm, including capital cost and maintenance charges for three years. Despite building the docks for cycles, the Panchkula MC paid Rs 1.09 crore as capital cost to the private firm.

While the execution of infrastructure projects by public-private participation (PPP) is usually aimed at reducing the burden on state resources, for which a preliminary report or a feasibility study is conducted to determine if the project is technically feasible and passes the normal cost-benefit analysis, sources in the MCP confirm that no such study was undertaken.

“The project was rushed to make the docks functional before the 2019 elections. The docks were set up at urban areas. The total cost of the project was split into capital cost and operating cost which was to be paid later—as works under Rs 1 crore can be approved by MC Commissioner even without the nod from other higher authorities,” said an government official privy to the matter, requesting anonymity.

It was in July 2018 that requests for proposals (RFP) for engaging an agency for installation and operation of Public Bicycle Sharing System (PBS) in Panchkula with 200 cycles at 20 stations was floated. Tenders for the work were invited in August 2018, but no RFP was received. Thereafter, the tenders were re-invited in November 2018, following which Yaana Private Limited had submitted its bid.

As per documents accessed by the Indian Express, the firm had quoted Rs 1 crore as capital cost and Rs 1,600 per cycle per month as operating cost. After negotiations, the operating cost was revised to Rs 1,520 per month per cycle, with the capital cost remaining unchanged.

The work order was then issued to the agency in March 2019, for a total contract value of Rs 2.09 crore. In addition to the above, the private company was also given entitlement to advertisement revenue, revenue earned from the sale of membership, income earned from cycle rental and from conducting an annual cycle event. The civic body also provided for the flooring at the station. All this, without any estimate, cost analysis, feasibility study and without deliberating on the financial viability of the project.

As per the contract, the project if extended after its current time period of three years- ending in August 2022, will again require negotiations to finalise the maintenance cost per cycle per month, however, no capital cost will be charged.

Exclusive rights of 8 docks’ ad revenue given to pvt firm

Further, giving disproportionate benefits to the private firm, the Panchkula MC has entitled the firm to eight of the 20 docks’ advertisement revenue, instead of sharing the total profit from the 20 docks in a 60-40 ratio.

As per the PWD Code, the private firm is responsible for the selling advertisement space on the system and the revenue earned is to be shared between the Municipal Corporation of Panchkula and the private firm in 60-40 ratio. However, under the project, the 20 cycle stations were divided in the ratio of 60-40 (12 to MCP and 8 to the firm) for advertisement revenue sharing in a draw held in August 2019.

On queries regarding the issues, MC Panchkula Commissioner RK Singh said, “I was not in the corporation at the time when the public-private-partnership deal was struck. I will have to go through the files to look into the matter.”

UT MC to charge Rs 12 lakh from pvt firm for same project

While Panchkula MC has paid a total of Rs 2.09 crore to a private firm for operating the 20 cycling docks built by the civic body itself, Chandigarh civic body- implementing the same project at a much wider scale, with 25 docks already functional, will annually charge Rs 12 lakh from the private firm involved in running the business. The docks in the UT are also being built at the cost of the private company.

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