After finding no takers for tenders floated to procure new buses, Chandigarh Transport Undertaking (CTU) has relaxed terms and conditions to attract manufacturers.
The UT administration's plan of improving the public transportation system in the city has been marred by delays.
The administration has been trying to purchase 50 new buses for the past one year and also floated tenders on four occasions, but nothing could be processed as the participating companies. Tata Motors and Ashok Leyland refused to accept the terms and conditions laid by the administration.
The administration, however, is not considering Volvo, the third company participating in the bidding process which rolls out some of the most expensive buses.
The administration had incorporated a 10-year annual maintenance contract (AMC) clause, which had triggered apprehensions among the two participating companies.
It had even written to the transport ministry to urge the companies to accept their terms and conditions, but in vain.
Left with no option, the administration conceded to the demands of the bus manufacturers and reduced the AMC to five years.
UT home secretary Anil Kumar said: "We had incorporated 10-year AMC clause on the pattern of Delhi, but now we have reduced it to five years. We have even refloated the tender stating new terms and conditions."
Earlier, the AMC used to be of eight years. Last year, the administration had earmarked Rs. 45 crore to purchase new buses, but the funds lapsed.
Recently, CTU had pulled out around 50 buses from inter-state services to strengthen the local bus service. As per official figures, CTU has a fleet of more than 500 buses, which carries more than 50,000 residents every day.
To make the city's public transportation more effective, the Centre has allocated Rs. 131 crore to the administration for the next fiscal year. The funds will be used to replace 117 buses which will complete the life span of eight years and acquisition of new 150 buses to augment the fleet of local buses under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) programme, creation of a new bus terminus and strengthening of public transportation.
Annually, CTU is incurring losses of more than Rs. 3 crore and recent increase in the diesel prices will add a loss of around Rs. 2 lakh per day to the existing losses.