Sarnaik raises alarm over ₹3,191-cr loss to MSRTC in bus leasing deal

The corporation is incurring a loss of ₹12 per kilometre for 12-metre-long buses and ₹16 per kilometre for nine-metre-long buses supplied by Evey Trans, said Sarnaik

Mumbai: Transport minister Pratap Sarnaik on Friday raised alarm over an estimated loss of ₹3,191 crore to the Maharashtra State Road Transport Corporation (MSRTC) in taking 5,150 electric buses on lease from Evey Trans Pvt Ltd, a subsidiary of Olectra Geentech Ltd. The minister directed officials to prepare a proposal for viability gap funding, which will be sent to the state government.

Representative image (Hindustan Times)

“If the state government agrees to bear this loss, the bus supply contract can be fully implemented,” said Sarnaik. “A meeting will be held soon with chief minister Devendra Fadnavis and deputy chief ministers Eknath Shinde and Ajit Pawar to finalise the issue.”

According to the contract between MSRTC and Evey Trans, the company will supply 5,150 buses on lease to the corporation at a cost of ₹70,000 crore, payable over 12 years. The company has supplied only 220 buses so far and missed the deadline to supply another 1,000 buses.

Meanwhile, the corporation is incurring a loss of ₹12 per kilometre for 12-metre-long buses and ₹16 per kilometre for nine-metre-long buses supplied by Evey Trans, said Sarnaik. A report prepared by MSRTC’s finance department indicates the 12-metre-long buses will be profitable after five years while the nine-metre-long buses will be profitable after nine years, said an MSRTC official.

“Considering the terms of the contract and current passenger load factor of 70% in state transport buses, MSRTC will incur losses worth ₹3,191 crore over the next few years.” the official said.

On Monday, Sarnaik had expressed displeasure with Evey Trans over delays in supply of buses and directed MSRTC officials to cancel the contract if the company failed to deliver around 1,000 buses by mid-July. Subsequently, the Mahayuti leadership told the transport minister that it would not be possible to cancel the contract and MSRTC should work out a new schedule for supply of buses with the firm.

Accordingly, on Friday, Sarnaik along with the additional chief secretary (transport), Sanjay Sethi, held a meeting with MSRTC officials. He expressed displeasure with officials about being kept in the dark regarding the estimated losses and questioned them about resources to cover for the losses.

“How will we fund this loss of ₹3,191 crore? Priority should be on payment of salaries to ST employees, followed by fuel and other operating costs,” Sarnaik said.

The decision to seek viability gap funding from the state government has now pushed the ball in the latter’s court.