Metro gives Larsen & Toubro monopoly over city transport
B V Shiv
Shankar, Times of India, Hyderabad, Apr 27,
2012,
HYDERABAD: While Hyderabad metro
rail is expected to be the panacea to the growing traffic congestion in the
city, the urban rail services can sound the death knell to other public
transportsystems already in place in the city
due to a monopoly clause granted by the state to Larsen & Toubro, the
private partner, through the concession agreement.
The clause in the concession agreement restricts the government from developing or improving the public transport system along the stretch of the three corridors- Miyapur to LB Nagar (corridor-I), Jubilee Bus Station to Falaknuma (corridor-II) and Nagole to Shiplaramam (corridor-III) - where the metro rail is taking shape. This would mean that there would be no scope for the improvement of the city bus service or MMTS (Multi-Model Transport System) that has emerged as a popular mode of urban rail transport.
The concession agreement says: "The government shall not construct any rail or road transport system between, inter alia, the three metro corridors" for a period of 35 years from the date the metro rail becomes operational. Further, L&T is entitled to an additional concession period of another 35 years. That means that the state government cannot develop any other public transport system for over 70 years without the consent of the private engineering company.
More startlingly, the concession agreement even restricts the government from revising the fare for the public transport or extending discounts or reductions in the fare and in the event of breach of these provisions, the government is liable to pay compensation to L&T under the latter's terms.
This clause can go against the state government and can end up acting against the interests of the commuter for whose benefit the metro rail has been conceived. This is because at a delay of Rs 5 crore per day in the construction of the project, keeping in mind the factors of the prevailing rate of inflation, insurance, currency fluctuation and rate of interest on the escalated project cost, the basic fare of the metro rail is expected to be around Rs 14 as of April 1, 2016. This would mean that the commuter would have to pay a high price for travelling on the metro rail even as the state would be helpless in improving the other modes of transport.
Charging that these provisions of the concession agreement are in violation of the Competition Act 2002, members of civil society, who have already petitioned the AP High Court against Hyderabad Metro Rail Limited (HMRL) on the charges of changing the alignment unilaterally, are now mulling moving the Competition Commission. "The provisions made in the concession agreement are monopolistic and are in defiance of the Competition Act. We are planning to complain to the Competition Commission," said Prof C Ramachandriah, who is spearheading the agitation against metro rail project.
While citing a similarity of the Hyderabad metro rail case with that of the Bangalore International Airport (BIA) that is facing a case under the Monopolistic Trade Practice Act after it insisted upon the closure of the government-run HAL airport in the city, Ramachandriah said curtailing the growth of public sector companies to suit the needs of private companies was unfair. A petition filed by Vivek Kulkarni, a former IAS officer, against BIA, is pending in the Karnataka high court.
However, authorities in HMRL said the metro rail service would only supplement the existing public transport system, and, hence, would not violate the Competition Act. "We are making use of the city buses as the feeder service for the metro rail. There is no question of treating it as our competitor," said a senior officer in the HMRL. An e-mail query to the L&T did not elicit reply.
The clause in the concession agreement restricts the government from developing or improving the public transport system along the stretch of the three corridors- Miyapur to LB Nagar (corridor-I), Jubilee Bus Station to Falaknuma (corridor-II) and Nagole to Shiplaramam (corridor-III) - where the metro rail is taking shape. This would mean that there would be no scope for the improvement of the city bus service or MMTS (Multi-Model Transport System) that has emerged as a popular mode of urban rail transport.
The concession agreement says: "The government shall not construct any rail or road transport system between, inter alia, the three metro corridors" for a period of 35 years from the date the metro rail becomes operational. Further, L&T is entitled to an additional concession period of another 35 years. That means that the state government cannot develop any other public transport system for over 70 years without the consent of the private engineering company.
More startlingly, the concession agreement even restricts the government from revising the fare for the public transport or extending discounts or reductions in the fare and in the event of breach of these provisions, the government is liable to pay compensation to L&T under the latter's terms.
This clause can go against the state government and can end up acting against the interests of the commuter for whose benefit the metro rail has been conceived. This is because at a delay of Rs 5 crore per day in the construction of the project, keeping in mind the factors of the prevailing rate of inflation, insurance, currency fluctuation and rate of interest on the escalated project cost, the basic fare of the metro rail is expected to be around Rs 14 as of April 1, 2016. This would mean that the commuter would have to pay a high price for travelling on the metro rail even as the state would be helpless in improving the other modes of transport.
Charging that these provisions of the concession agreement are in violation of the Competition Act 2002, members of civil society, who have already petitioned the AP High Court against Hyderabad Metro Rail Limited (HMRL) on the charges of changing the alignment unilaterally, are now mulling moving the Competition Commission. "The provisions made in the concession agreement are monopolistic and are in defiance of the Competition Act. We are planning to complain to the Competition Commission," said Prof C Ramachandriah, who is spearheading the agitation against metro rail project.
While citing a similarity of the Hyderabad metro rail case with that of the Bangalore International Airport (BIA) that is facing a case under the Monopolistic Trade Practice Act after it insisted upon the closure of the government-run HAL airport in the city, Ramachandriah said curtailing the growth of public sector companies to suit the needs of private companies was unfair. A petition filed by Vivek Kulkarni, a former IAS officer, against BIA, is pending in the Karnataka high court.
However, authorities in HMRL said the metro rail service would only supplement the existing public transport system, and, hence, would not violate the Competition Act. "We are making use of the city buses as the feeder service for the metro rail. There is no question of treating it as our competitor," said a senior officer in the HMRL. An e-mail query to the L&T did not elicit reply.
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