MUMBAI: Looking to steer itself out of the red, the Maharashtra State Road Transport Corporation (MSRTC) is rolling out a fresh plan to give its bus stands a makeover across the state. The plan is to increase the period for which it leases its bus stands under the public-private-partnership (PPP) model, from 60 years to 98 years, thus creating a stable revenue stream.
To sweeten the deal, the department also wants to offer private players redevelopment rights in exchange for a share of this space, instead of charging them a premium for the right to commercially exploit the leased area. The corporation would then lease this space, earning consistent revenue.
MSRTC has been the backbone of intra-state road transport, offering affordable rates for the last 70 years. But the concessions it offers have come at a huge cost. The corporation’s accumulated losses mounted to ₹10,300 crore during this period.
To improve its revenue, MSRTC rolled out the PPP model to lease its bus stands – it has 598 bus stands and 251 bus depots across the state – 20 years ago. The lease period then was 30 years and 45 bus stands were developed.
In October last year, the state government increased the lease period to 60 years, to develop another 72 bus stations under the PPP model. Now, the transport department has put this proposal on hold, so that a fresh tender can be prepared, further extending the lease period to 98 years.
The fresh proposal was submitted to the state revenue department in early June. “The first lease period would be for 49 years, which will be extended by another 49 years,” revealed an official with the transport department.
Significantly, one of the core terms of the lease has been amended. Going forward, contracts will be awarded on the basis of the “share in commercial property” developed by private parties. Under the earlier regime, MSRTC used to charge a premium allocating the bus stand for redevelopment. Accordingly, the corporation earned ₹32 crore in direct payment over the last 20 years, and it received upgraded bus stands that cost ₹23 crore to revamp.
Explaining the new model, an official with the transport department said, “We have decided to award contracts on the basis of share in commercial property. So, for instance, if a private developer constructs 1,000sq ft of space after redevelopment, they would offer a minimum 30% of that space to MSRTC. The corporation would, in turn, lease that commercial space, ensuring monthly income during the lease period. Parties that offer the greatest share in commercial space will be awarded contracts for redevelopment under the PPP model.”
Transport minister Pratap Sarnaik said, “We are already giving the land on lease to a private developer for 60 years. As per the practice in the real estate market, a 98-year lease will generate more revenue compared to a lease of 60 years. Revenue would be earned over a longer period for MSRTC.”