[sustran] Metro gives Larsen & Toubro monopoly over city transport

[Vinay Baindur]

http://timesofindia.indiatimes.com/city/hyderabad/Metro-gives-Larsen-Toubro-monopoly-over-city-transport/articleshow/12888108.cms
*Metro gives Larsen & Toubro monopoly over city transport*

B V Shiv Shankar, TNN | Apr 27, 2012, 03.14AM IST


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 transport systems 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.